First the good: the U.S. unemployment
rate fell to 5.1%, down by nearly half since the peak (10%) during the Great
Recession.
While it was a healthy sign, August's job
gains sent more of a mixed message.
The economy added
173,000 jobs in August. It was a decent gain in jobs for the month, but below
the average monthly jobs gains -- 212,000 jobs -- so far this year.
The jobs number
also fell below expectations. Economists surveyed by CNNMoney projected that
the economy would add 207,000 jobs.
Wages grew 2.2% in
August, a little better than expected but well below the 3.5% growth that the Federal
Reserve would like to see. But
wage growth has been missing during the U.S. economic recovery and any growth
is an encouraging sign.
"The job
market is still moving in the right direction," says Robin Anderson,
senior economist at Principal Global Investors.
So far this year
the economy has added nearly 1.7 million jobs, on pace to gain about 2 million
jobs -- a healthy figure -- by the end of the year.
But the pace isn't
wow-inducing. By this time last year, the economy had added 1.9 million jobs.
Still one positive
sign for wage growth was that the economy added many high income jobs. Health
care added 56,000 jobs and financial services gained 19,000 jobs. Professional
service jobs, such as lawyers and accountants, grew by 33,000 in August.
While the report
wasn't a clear victory, historically August's jobs gains have historically been
revised upward.
"August
always gets revised up," says Tom Gimbel, CEO of LaSalle Network, a
recruiting firm. The economy "is in a very neutral place. It's not falling
down and not jumping up."
The report is also likely to cloud the
picture for the Federal Reserve's historic decision to raise its key interest
rate, that is still on the table when members of the central bank meet in less
than two weeks.
Fed officials have
said they wanted to see key economic data like the jobs report before deciding
on a rate hike. Although the U.S. economy has been good, this report is not a
resounding victory for the American economy.
"You can't
hike on a 173,000 number," says Phil Orlando, an economist at Federated
Investors. "The Fed has to think long and hard about pushing this thing
out to December."
Other experts
think September is still on the table. Even before the August jobs report came
out, Fed officials appeared split. A September rate hike still appears to be an
open question.
Concerns about a global economic slowdown and volatility
in stock markets seemed to have
lowered the chance of a rate hike in September.
It would be the Fed's
first rate hike in almost a decade and would signal that the central bank is
confident in the health of U.S. economy.
A rate hike will
matter to millions of Americans on a range of topics, and it will be a major
event for world financial markets. But it's still unclear if it will come soon.
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