Washington (AFP) – The US economy added significantly fewer jobs than expected in August, government data showed on Friday, in a closely watched report after weak data earlier prompted President Donald Trump to fire a key economic official. Overall, the figures confirm a slowdown in the labor market of the world’s biggest economy as businesses pull back on hiring while grappling with uncertainty sparked in large part by Trump’s fast-changing tariffs.
US job growth came in at 22,000 last month, down from July’s 79,000 figure, said the Department of Labor. The jobless rate edged up from 4.2 percent to 4.3 percent, in line with analysts’ expectations. Job growth in June, while earlier estimated at 14,000, was revised to a 13,000 decline, the report said. Hiring in July was adjusted slightly upwards.
US employment numbers are usually a key data point that analysts monitor, as these usually have some bearing on how the Federal Reserve adjusts interest rates. Friday’s numbers are under particular scrutiny after a poor showing in July’s data — released last month — prompted Trump to claim the figures were “rigged” and fire the commissioner of labor statistics. US job growth missed expectations at the time, too, while revisions to hiring figures in recent months brought them to the weakest levels since the Covid-19 pandemic.
In firing commissioner Erika McEntarfer last month, Trump charged that she had “faked” jobs data to boost Democrats’ chances of victory in the recent presidential election. He also pointed to the downward revisions to hiring numbers, saying that similar things have happened this year — after his return to the presidency in January — and “always to the negative.” But Nationwide chief economist Kathy Bostjancic told AFP that data revisions take place as survey response rates have declined. If companies respond late, numbers have to be updated to reflect incoming data. “I’ve never viewed the data as being politically determined or influenced,” she said. She conceded that “there’s room for improvement in data collection.”
EY chief economist Gregory Daco had anticipated that Friday’s report would “confirm that a marked slowdown in labor market conditions is underway.” This comes as business leaders “continue to restrain hiring” as they grapple with softer demand, higher costs, and interest rates, he wrote in a note. Trump’s stop-start approach to rolling out tariffs has snarled supply chains and made it tough for businesses to plan their next moves. Many firms said they have been forced to put growth plans on hold.
A Briefing.com consensus forecast expected US hiring at 78,000 in August. But the cooldown in hiring has been notable this year, with KPMG senior economist Kenneth Kim earlier telling AFP that “last year, the average payroll gain per month was 168,000.” “Recent data highlights a fragile balance in the labor market: labor demand and supply have become subdued, while layoffs remain limited,” Daco said. He also warned that the labor force participation rate will likely edge down as stricter immigration policies under the Trump administration increasingly constrain worker flows in the coming months.
With a cooler labor market, analysts expect the Fed might be inclined to cut rates at the end of its policy meeting from September 16-17. Since its last cut in December, the US central bank has held interest rates steady at a range between 4.25 percent and 4.50 percent. In doing so, Fed policymakers have been balancing between risks of inflation and a deteriorating jobs market. Economists have warned that Trump’s wide-ranging tariffs on imports could fuel inflation and bog down economic growth over the long run. The Fed is monitoring the duties’ effects on consumer prices as officials mull the right timing for their next rate cut, despite Trump’s growing calls for swift and significant reductions. A jobs report signaling a tepid labor market would likely support the need for a cut to boost the economy, however.
© 2024 AFP
