Washington, Sept. 6 (Reuters): US employers hired fewer workers than expected in August and the jobless rate hit a four-and-a- half-year low as Americans gave up the search for work, complicating the Federal Reserve’s decision on whether to scale back its massive monetary stimulus this month.
Non-farm payrolls increased 169,000 jobs last month, the US labour department said on Friday, falling short of the 180,000 Wall Street had expected and adding to signs that economic growth may have slowed a bit in the third quarter.
In addition, the job count for June and July was revised to show 74,000 fewer positions added than previously reported.
While the unemployment rate fell to 7.3 per cent, its lowest since December 2008, the decline reflected a drop in the share of working-age Americans who either have a job or are looking for one. That participation measure reached its lowest point since August 1978, a further sign of underlying economic weakness.
“Even the US Federal Reserve will conclude that the employment trend is moderating and for that reason alone they probably will have second thoughts about tapering bond purchases this month,” said Cary Leahey, senior adviser at Decision Economics in New York.
The US stock markets opened higher as investors saw the report as increasing chances the US central bank could maintain its $85-billion-a-month bond buying pace for a little longer. The dollar fell against the euro and the yen on the data, while prices for US treasury debt rallied.
Fed policymakers will scrutinise the jobs data at their meeting on September 17-18. They had been widely expected to trim their asset purchases at that meeting. Fed officials have made clear that they will base their decision on the progress the labour market has made since they launched their third round of “quantitative easing” a year ago. When they started that round, they were looking at a jobless rate of 8.1 per cent.