August US non-farm payrolls rise by 156,000

Job growth in the States slowed a tad last month alongside wage gains that again fell short of estimates, amid a sharp decline in service sector hiring, although some economists believe seasonal quirks in the data may have played a hand.

US non-farm payrolls rose by 156,000 in August, according to the Department of Labor.

Economists had forecast an increase of 180,000.

Significantly, average hourly earnings were just a touch higher, rising by 0.1% on the month (consensus: 0.2%), for an unchanged year-on-year reading of 2.5% (consensus: 2.6%).

After an iitial spike lower, the yield on the benchmark 10-year US Treasury note was two basis points higher at 2.14% and just off its lows for the year.

Furthermore, June and July's tally for non-farm payrolls were revised lower by a combined 41,000, the government said in a release.

In parallel, the unemployment rate printed at 4.4%, rising by one tenth of a percentage point in comparison to the month before.

That was despite the labour force participation rate having remained at 62.9%.

By sectors, weakness in non-farm payrolls was squarely centred on the services side of the economy, where job creation fell off from 179,000 to 95,000.

The story in goods producing industries was exactly the opposite, with job growth jumping from 23,000 in July to 70,000 for August.

Employment in manufacturing picked-up from a 26,000 people pace in the month before to 36,000 for August, while in Construction it rose by 28,000 after dipping by 3,000 in the month before.

The index of aggregate weekly hours came off by 0.2% on the month to 107.4, a similar fall to that seen in August 2016 when on-farm payrolls rose by 176,000.

Capital Economics's chief US economist, Paul Ashworth, commented: "With the survey evidence still strong and third-quarter economic growth on course for another decent gain after the second, there is no reason to believe that the modest drop-off in employment growth is the start of a more serious downturn. Nevertheless, since the September figures could be affected by Hurricane Harvey, the Fed might be waiting until the October data are released in early November before confirming that the labour market remains in good health."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, added: "Our initial take here is that the August seasonal problem in the payroll numbers, which seemed to be fading, has struck again, but we won't know for sure until the number has been revised a couple of times."

Ashworth also believed seasonal quirks in the data might have played a hand.