Unemployment Rate Drops to 7-Year Low; 173K New Jobs in August

One of the most closely watched employment report in years came in this morning showing hiring in August was lower than expected. The U.S. Labor Department said employers added 173,000 new jobs last month, almost 50,000 fewer than economists were expecting.

The Federal Reserve is set to meet in two weeks with an interest rate hike top on its agenda. Economists and the Fed’s board were looking to the August jobs report for guidance about the labor markets.  A weak report might have encouraged the Fed to delay hiking rates.

Because the U.S. Bureau of Labor Statistics gathered the jobs data before the sharp drops in the stock market last month, the impact, if any, is not reflected in this morning’s report.

Though new job creation was the lowest since March, other parts of the report pointed to a strengthening economy. The unemployment rate fell to 5.1 percent from July’s 5.3 percent, the lowest level since April 2008. Hourly nonfarm earnings rose by 8 cents, a rate of .3 percent which was more than expected.

In addition, the initial jobs counts for June and July were revised up by a total of 44,000.

August’s report is among the more volatile of the year, due to seasonal factors. The New York Times noted that the Labor Department’s initial August numbers are revised upward by an average of 79,000.

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The biggest gains in August came from hiring in education and healthcare. Government education hiring surged as 22,900 new jobs were added to national payrolls. Healthcare increased by 40,500, with hiring by ambulatory services such as doctors’ offices and home health care, adding 21,100. Hospitals added 15,900.

Thee wee also significant gains in jobs at bars and restaurants (+26,100), financial services (+19,000),  and in  professional and technical services (+14,500), a sector that includes computer services and management and technical consulting. Temp grew by 10,700.

Manufacturing lost 17,000, most of that coming in the non-durable goods area where food manufacturing was off by 6,500 jobs.

Unlike in previous months when the unemployment rate declined because people gave up looking for work and dropped out of the labor force, in August more unemployed found jobs. The labor force participation rate was unchanged at 62.6 percent.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.