U.S. job growth slowed more than expected in August, with retail hiring declining for a seventh straight month, but strong wage gains should support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.
The Labor Department’s closely watched monthly employment report on Friday also showed a rebound in the workweek as manufacturers increased hours for workers after slashing them in July. The economy’s waning fortunes, underscored by an inversion of the U.S. Treasury yield curve, have been largely blamed on the White House’s year-long trade war with China.
Washington and Beijing slapped fresh tariffs on each other on Sunday. While the two economic giants on Thursday agreed to hold high-level talks in early October in Washington, the uncertainty, which has eroded business confidence, lingers.
The economy is also facing headwinds from Britain’s potentially disorderly exit from the European Union, and softening growth in China and the rest of the world.
The Federal Reserve is expected to cut interest rates again this month to keep the longest economic expansion in history, now in its 11th year, on track. The U.S. central bank lowered borrowing costs in July for the first time since 2008.
“It is consistent with slowing U.S. growth,” said Brian Coulton, Chief Economist at Fitch Ratings in New York. “But it doesn’t look anything like impending recession territory.”
Nonfarm payrolls increased by 130,000 jobs last month, the government said. The economy created 20,000 fewer jobs in June and July than previously reported. Economists polled by Reuters had forecast payrolls rising by 158,000 jobs in August.
A seasonal quirk could account for last month’s less-than-expected increase in employment. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.
But slower job growth is also in line with sharp declines in both the Institute for Supply Management’s manufacturing and services industries employment measures in August. In addition, global outplacement firm Challenger, Gray & Christmas reported a 37.7% rise in planned job cuts by U.S-based employers in August.
Frontpage December 13, 2018