Economy adds 173K jobs in August; jobless rate down to 5.1 percent

The U.S. economy added 173,000 jobs in August, raising uncertainty over a looming Federal Reserve decision on whether to raise interest rates later this month.

The jobless rate fell to 5.1 percent, the lowest level since April 2008, from 5.3 percent in July, the Labor Department reported on Friday.

The job number though was below expectations, with economists forecasting about 220,000 jobs this month.

{mosads}All eyes are on the Fed and whether the central bank’s policymakers will deem the labor market’s expansion — especially now that the jobless rate has moved within its year-end forecast — enough to sway them to raise interest rates at their Sept. 16-17 meeting.

Steady hiring and underlying jobs growth is a bright spot in the economic picture that could prove enough to convince central bank policymakers that September is the time to take a step and raise rates for the first time in nearly a decade.

But there are plenty of other factors that could push that decision to December, including turbulence in the global financial markets created by China’s recent moves that devalued their currency and raised questions about the pace of Beijing’s economic slowdown.

In addition, the strength of the U.S. dollar, which has made American products more expensive overseas, and broader questions about global growth outside of China are all expected to factor into the Fed’s decision.

Many economists have pushed back their forecast to later this year after China’s policy decisions rocked global stock markets in August.

Yet, so far, the unsteadiness of the global economy hasn’t weighed on U.S. economic growth, which chugged along at a 3.7 percent pace in the April-June quarter.

Meanwhile, the economy generated 44,000 more jobs than initially reported over the past two months, raising the monthly average over the past three months to a healthy 221,000, a figure economists argue is enough to reach full employment and further cinch up slack in the labor market.

Speaker John Boehner (R-Ohio) said while the job numbers are encouraging, congressional Republicans will continue passing legislation that cuts excessive red tape, reduces ObamaCare mandates that hinder hiring and boosts American energy production.

“It’s a good start, but there’s much more work to be done,” he said.

“We’ll continue advancing solutions that address Americans’ top priorities, and the president ought to work with us to get more of these bipartisan, common-sense initiatives signed into law.”

Jason Furman, chairman of the Council of Economic Advisers, said the economy has added 8 million jobs over the past three years, the fastest pace since 2000.

Meanwhile, the private sector has added 13.1 million jobs over 66 straight months, extending the record-long streak.

“But there’s more work to do to ensure that America’s domestic momentum can continue to offset some of the headwinds from the global economy,” Furman said in a statement.

He noted that the loss of 17,000 manufacturing jobs highlights the challenges the United States is facing amid a slowing global economy.

“This is one of the reasons why we’re engaging with countries like China to make sure they’re taking the steps they can to be an engine of growth for the global economy that would help not just the whole world, it would help our exports, our economy and our manufacturing,” he said on MSNBC.

Furman said President Obama will urge China to take the right “macroeconomic steps” to boost their economy and help the U.S. during meetings with Chinese President Xi Jinping in Washington later this month.

Chad Moutray, chief economist with the National Association of Manufacturers, said August is the first time employment has declined in the sector since July 2013.

“It suggests that challenges in the manufacturing sector continue to hold down hiring rates, with headwinds such as the strong dollar and economic problems in key export markets dampening overall demand,” he said.

Hiring is averaging only 3,500 a month for manufacturers this year — well below the more robust average of nearly 21,000 a month during the second half of 2014.

“Financial concerns in the global equity markets, driven in particular by worries about growth in China, have likely not helped matters recently, and could partly explain the lower manufacturing hiring rates for August,” he said. 

This story was updated at 9:46 a.m.