The nation’s economy continued to slowly but steadily improve last month, with the unemployment rate declining further to 7.3 percent — the lowest in nearly five years — and businesses adding another 169,000 jobs, the Labor Department reported Friday morning.
Job gains were widespread from manufacturing to health care and office work, but they were particularly strong in retail, where stores hired another 44,000 workers. Government jobs also broke their declining trend during the month and posted a 17,000 increase.
The much-watched jobs report showed strength in some areas and weakness in others.
The average workweek picked up to 34.5 hours, with gains particularly strong in manufacturing, and average hourly earnings jumped 5 cents to $24.05. That brought the increase in wages over the last year to 2.2 percent — breaking the 2 percent barrier for the first time in years — and means that consumers will have more in their paychecks to spend in coming months.
But while August’s overall 169,000 increase in jobs was in line with the average increase of 184,000 a month so far this year, the department reported that job gains in June and July were 74,000 fewer than estimated earlier, in a sizable downward revision that suggests the economy was much softer at the beginning of the summer.
Moreover, the unemployment rate declined in part because another 312,000 workers dropped out of the labor force, bringing the labor force participation rate to the lowest level since 1978. That could mean workers were either retiring, returning to school, or too discouraged to keep trying after being unable to find jobs.
Economists saw the report as soft overall and disappointing.
“While far from a disaster, this is a considerably weaker report than expected,” said former White House economist Jared Bernstein. “The labor market remains stuck in second gear.”
Nouriel Roubini, chairman of Roubini Global Economics, called the report “weak” and “mediocre,” and said it should discourage the Federal Reserve from starting to end its easing programs later this month.
“The unemployment rate is falling only because the participation rate is falling. Most components of demand are lower. There’s no case for tapering” with the Fed’s easing programs, he said.
Justin Wolfers, economics professor at the University of Michigan, said global markets will be disappointed with the big downward revisions for job gains in June and July. He summarized the report as “Bleh. Ugh. Ouch.”
“Many have been expecting good news, making the downward revisions worse than they seem,” he said.
“What we’re looking for is a self-sustaining recovery. Today’s payroll doesn’t provide any confidence.”
• Patrice Hill can be reached at phill@washingtontimes.com.
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