Jobless Rate at 29-Year Low; Wages Level Off

The U.S. economy added jobs at a slower pace than expected in August, and wages cooled, even as the unemployment rate fell to 4.2%, tying a 29-year low.

The economy added 124,000 jobs last month, fewer than the July gain of 338,000, Labor Department figures showed. The smaller gain in August reflected losses of factory and construction jobs and a gain in service employment that was less than this year's average.

Workers' average hourly earnings rose 0.2%, to $13.30, in August. That came after a revised increase of 0.3% during July, smaller than the previously reported 0.5% gain.

Stocks and bonds surged on the news of tame wage and job growth.

"It's a weak enough number to take heat off the Federal Reserve for a tightening in October," said Suzanne Rizzo, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.

Analysts had expected a gain of 223,000 jobs in August, after the initially reported 310,000 increase in July. August's unemployment rate -- down from 4.3% in July -- tied a 29-year low set in May and March. Federal Reserve policymakers are focusing on the labor market as they maintain a defensive posture against accelerating inflation.

The rate-setting Federal Open Market Committee next meets Oct. 5, and the jobs report for August will be the only monthly employment report the central bankers will have a chance to review. The September employment report will be issued Oct. 8.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER