Rate of job creation in the US slows dramatically in August

By: MRT Desk

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Rate of job creation in the US slows dramatically in August

By Lucia Mutikani

WASHINGTON, Sep 3 (Reuters) – Job creation in the United States slowed more than expected in August, amid weaker demand for services and persistent worker shortages as COVID-19 infections rise , although the pace was sufficient to sustain the economic expansion.

Nonfarm payrolls rose 235,000 jobs last month after rising 1.053 million in July, the Labor Department said in its monthly employment report on Friday, closely followed by markets, analysts and central bank officials.

The unemployment rate fell to 5.2% from 5.4% in July. However, this figure is underestimated by people who are wrongly classified as “employed but absent from work”.

Economists polled by Reuters had forecast that nonfarm payrolls would rise by 728,000 jobs and the unemployment rate would fall to 5.2%. Payroll estimates ranged from a low of 375,000 to a high of 1.027 million.

August’s initial payroll printing falls short of expectations and reflects slower-than-three-month average employment growth through July over the past few years, including in 2020. August payrolls have subsequently been revised upward in 11 of the last 12 years.

The report came as economists have slashed their estimates of GDP expansion for the third quarter, citing the surge in coronavirus cases driven by the Delta variant, as well as relentless shortages of raw materials, which are depressing sales of automobiles and restocking.

Friday’s report will be scrutinized by investors looking to gauge the timing of the Federal Reserve’s announcement on when it will begin to reduce its massive monthly bond buying program.

Fed Chairman Jerome Powell last week reaffirmed an ongoing economic recovery, but offered no indication of when the US central bank plans to start cutting its asset purchases, other than saying it could do so from “this anus”.

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