Newspaper article St Louis Post-Dispatch (MO)

U.S. Hiring Slowed in August, Yet Americans' Outlook Brightens

Newspaper article St Louis Post-Dispatch (MO)

U.S. Hiring Slowed in August, Yet Americans' Outlook Brightens

Article excerpt

WASHINGTON * U.S. employers slowed their hiring in August after two blockbuster months and barely raised their workers' pay, a pullback that may lead the Federal Reserve to leave interest rates alone until late this year.

But several surveys suggest that Americans are growing more optimistic about the job market, a trend that could boost spending and energize the economy in coming months.

Employers added 151,000 jobs in August, a modest gain after an increase of 275,000 in July, the most in eight months, and 271,000 in June. The unemployment rate remained at 4.9 percent for a third straight month, the Labor Department reported Friday.

Federal Reserve Chair Janet Yellen and other Fed officials highlighted the economy's improvement at a conference last month. Vice Chair Stanley Fischer suggested the job market was close to full health, an assessment that typically might prompt a rate hike.

Yet the August job figures may lead the Fed to hold off at its next meeting, Sept. 20-21, and await further economic data. Investors foresee only a 21 percent chance of a rate increase this month, according to futures markets, down from 24 percent on Thursday.

The Fed held its benchmark short-term rate at a record low near zero for seven years to support the economy after the financial crisis erupted in 2008. Its policymakers raised their key rate modestly in December but have stood pat since. Lower rates can encourage more borrowing and spending and thereby stimulate the economy.

Stock investors were mildly pleased with Friday's jobs figures. Higher borrowing rates tend to weigh down stock prices. The Dow Jones industrial average rose 72.66 points to close Friday at 18,491.96.

If a relatively tepid pace of hiring keeps the Fed on the sidelines, the continuation of ultra-low rates could sustain growth, some analysts suggested.

"This is a healthy thing if the (job) gains slow down a little bit, because that reduces the risk that the Fed will quickly raise rates and choke off the expansion," said Josh Wright, chief economist at iCIMS, a recruitment software company and former Fed staffer. …

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