WASHINGTON (AP) — A surprising drop in hiring and in the number of people seeking work in August sent a reminder that the US economic recovery is still prone to temporary slowdowns.
Employers added just 142,000 jobs last month, well below the 212,000 average of the previous 12 months. The unemployment rate fell to 6.1 percent from 6.2 percent. But that was because more people without jobs stopped looking for one and were no longer counted as unemployed.
Analysts took Friday’s Labor Department report in stride. They noted that other gauges of the economy – from manufacturing and construction to auto sales – remain solid. Layoffs have dwindled, too. Analysts also noted that month-to-month volatility in hiring is common even in a healthy economy.
But the dip in hiring also suggests that, though the Great Recession officially ended more than five years ago, the economy has yet to shed some of its lingering weaknesses. Held back by sluggish pay growth, for example, consumers continue to spend cautiously.
Most economists foresee an economy that’s poised to make further strides, punctuated at times by modest setbacks.
The figures “will inevitably spark speculation that the US recovery is somehow coming off the rails again,” said Paul Ashworth, an economist at Capital Economics. “However, we’re not too concerned by what is probably just an isolated blip.”
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The report showed the smallest job gains in eight months. The weaker-than-expected numbers make it unlikely that the Federal Reserve will speed up its timetable for raising interest rates. Most analysts expect the first rate hike around mid-2015.
The Dow Jones industrial average initially fell, but stocks returned to positive territory by Friday afternoon. The yield on the 10-year Treasury note dropped to 2.43 percent from 2.45 percent late Thursday. That suggests that some investors sought the safety of bonds and foresee no Fed rate increase anytime soon.
At least two temporary factors weighed on hiring in August, government officials said. A strike at Market Basket, a grocery chain in the Northeast, contributed to an unusually large drop of 17,000 jobs at food and beverage stores. That strike has since been resolved, which could lead to a rebound in hiring this month.