US non-farm payrolls rise far less than expected in August

Employers added 151,000 jobs in August, compared to expectations of 180,000, the Labor Department revealed on Friday. However, July's reading was revised to show a gain of 275,000 jobs, up from a previous estimate of 255,000.

The unemployment rate held at 4.9%, missing forecasts for a drop to 4.8%.

Average hourly wages rose 0.1% month-on-month in August, falling short of analysts' estimates for a 0.2% increase and marking a slowdown from July's 0.3% growth. Compared to the same month a year ago, hourly wages edged up 2.4%, also below expectations for a 2.5% gain and compared to a 2.6% rise in July.

The length of the average workweek dipped again in August, falling by one-tenth of an hour to 34.3.

The dollar fell 0.42% against the pound, 19% against the yen and 0.25% versus the euro, following the report.

Analysts said the worse-than-forecast non-farm payrolls is likely to scupper chances that the Fed will raise interest rates at the September policy meeting.

"Buckle up for a rate hike- not really," Think Markets analyst, Naeem Aslam, joked.

"The data has failed to paint this picture and crushed the dollar bulls who were holding their hopes very high that a rate hike could be possible this month. The flags were raised yesterday when we had the most ill ISM manufacturing data and if we combine this with today's weak wage growth, it all has failed investors' s hopes of cementing a rate hike."

Speaking at the Jackson Hole conference last Friday, Fed chair Janet Yellen said while the case for an interest rate hike has strengthened on an improving labour market and economic outlook, the next rate hike depends on upcoming data.

Fed vice chair Stanley Fischer referred to the non-farm payrolls report last week when he said it would "weigh in our decision" on whether the central bank tightens policy.

Mike Read, co-founder of trading network Pelican, noted: “Yellen indicated at the Jackson Hole meeting that the world’s largest economy only needs to add 75,000 to 150,000 new jobs each month to maintain employment levels, and today’s figure will be seen by many as another step towards a rate rise.

“Yet observers will look closely at the sluggish average earnings reports for the US workforce and be conscious that the global picture is far from clear. With a volatile US presidential election campaign entering its final stages, Yellen may opt to wait to move on rates.”