US payrolls rise 130,000, boosted by 25,000 for census count

[NEW YORK] US companies' hiring stumbled in August, likely cementing expectations for a second straight Federal Reserve interest-rate cut as trade uncertainty and softer global growth weigh on the outlook.

Private payrolls rose 96,000, a three-month low, after a downwardly revised 131,000 advance the prior month, according to a Labour Department report Friday that trailed the median estimate of economists for a 150,000 gain. Total nonfarm payrolls climbed a below-forecast 130,000, which was boosted by 25,000 temporary government workers to prepare for the 2020 Census count.

The jobless rate held at 3.7 per cent, near a half-century low, while average hourly earnings topped forecasts with a 3.2 per cent gain from a year earlier and 0.4 per cent from the prior month.

The data suggest bigger cracks are forming in the labour market, which could threaten the chief US economic engine of consumer spending and the record-long expansion itself - along with President Donald Trump's re-election chances in 2020. With the US-China trade war and weakness abroad already weighing on the outlook and Treasury yields down sharply this year, calls may grow for the Fed to cut interest rates this month by a half point instead of a quarter point.

Fed Chairman Jerome Powell will have a chance to clarify the central bank's outlook on Friday. 

Economists surveyed by Bloomberg had projected 160,000 new nonfarm jobs with unemployment at 3.7 per cent and annual wage gains at 3 per cent.

Revisions subtracted 20,000 jobs from the prior two months, bringing the three-month nonfarm average to 156,000.

Private employers added an average 129,000 jobs over the last three months. The latest figures contrast with ADP Research Institute data this week showing U.S. companies added 195,000 jobs in August.

Still, there were several signs the labor market remains solid. The participation rate, or share of working-age people in the labor force, increased to 63.2 per cent, while the employment-population ratio rose to 60.9 per cent, both up 0.2 percentage point from the prior month.

That reflected the household survey's count of employment rising by 590,000, while the number of unemployed people fell by 19,000 to 6.04 million.

In addition, two key early indicators of weakness in the US jobs market - hiring for temporary-help positions and weekly working hours -strengthened in August.

But the payroll figures showed weakness in several sectors. Manufacturing added an anemic 3,000 jobs, retailers cut positions for a seventh straight month and education and health services hired the fewest people since February.

Industries with solid gains included construction at 14,000 and professional and business services at 37,000.

The U-6, or underemployment rate, rose to 7.2 per cent from an 18-year low of 7 per cent. The gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.

BLOOMBERG