WASHINGTON — The pace of hiring in the United States quickened in August, and wages grew at their fastest pace in nine years — evidence that employers remain confident despite the Trump administration’s ongoing conflicts with its trading partners.
The economy added a strong 201,000 jobs, and the unemployment rate stayed at 3.9 percent, near an 18-year low, the government said Friday in its monthly jobs report.
The economy is expanding at a healthy pace, fueled by tax cuts, confident consumers, greater business investment in equipment and more government spending. Growth reached 4.2 percent at an annual rate in the April-June quarter, the fastest pace in four years.
“I view this as the strongest job market in a generation,” Andrew Chamberlain, chief economist at Glassdoor, a career website.
June-July Jobs Report Revised Downward
Even while reporting a robust job gain for August, the Labor Department revised sharply down its estimate of hiring in June and July. The government now says employers added 50,000 fewer jobs in those two months combined than it had previously estimated.
But the 201,000 job gain in August was nearly equal to the average gain of 196,000 over the prior 12 months, evidence of how consistent job growth remains.
Wages Up Nearly 3% Since August 2017
Average hourly pay jumped 0.4 percent in August and increased 2.9 percent compared with a year earlier. That’s the fastest annual gain since June 2009, when the Great Recession ended. Still, rising inflation, which also reached 2.9 percent in July from a year earlier, has offset that gain.
Yet most economists said they saw the pay increase as an encouraging sign that the low unemployment rate is compelling more employers to raise pay in order to compete successfully for workers.
“It looks like we’re finally seeing that acceleration in wage growth that we’ve been waiting for,” said Gus Faucher, chief economist at PNC Financial Services. “It’s good news for workers’ paychecks, it’s good news for consumers and it’s good news for the overall economy.”
Federal Reserve Poised to Raise Interest Rates
The rising wage and jobs data make it a near-certainty that the Federal Reserve will raise short-term interest rates when it meets later this month, economists said. Most Fed watchers also expect another rate hike in December and perhaps two more next year.
The prospect of higher borrowing costs — as well as bigger paychecks, which can cut into corporate profits — appeared to hold back the stock market Friday. The Dow Jones industrial average fell 104 points in mid-day trading.
Minimum Wage Laws Have Impact
Jason Mazzarone, chief executive of SoBol, a restaurant chain that sells a variety of acai bowls, says he is paying workers more, mostly because of higher minimum wage laws in New York and other states where his 26-store chain operates. He has also raised pay for other workers who were already earning more than the minimum.
On New York’s Long Island, for example, where many of his outlets are located, the minimum wage will reach $12 an hour by year’s end. For shift managers now making $16 an hour, Mazzarone said, “their pay has to go up too.”
The Trump administration has imposed tariffs on imported steel and aluminum as well as on $50 billion of goods from China. U.S. companies across a range of industries have expressed alarm about those import taxes and about counter-tariffs that other nations have imposed on U.S. exports. The White House has also threatened to hit China with higher taxes on $200 billion more of Chinese goods.
Yet so far, there are few signs that those concerns have affected overall hiring.
Manufacturers Shed Jobs
Manufacturers cut 3,000 jobs last month, the first time they have cut jobs in about a year. Factories have taken the most direct hit from higher tariffs, with automakers, aerospace, and machinery companies absorbing higher steel and aluminum costs. Automakers accounted for all the losses, cutting nearly 5,000 jobs.
Still, those losses might not fully reflect trade disruptions. Automakers typically retool their factories for new model year cars over the summer, which can temporarily distort the job figures.
Friday’s jobs report showed that professional and business services, a category that includes both higher-paying fields such as engineering and accounting and lower-paying temp jobs, led August’s job growth with 53,000 added positions. Health care providers added 33,000 and transportation and warehousing companies 20,200, the most in nearly a year.
Manufacturing shed 3,000 jobs, its worst showing in more than a year. Retailers cut 6,000 positions, a surprising drop given reports of strong sales by such leading retailers as Target, Walmart and Best Buy.
Economy on Track to Grow 3% for First Time Since 2005
Most analysts have forecast that the economy will expand at an annual pace of at least 3 percent in the current July-September quarter. For the full year, the economy is on track to grow 3 percent for the first time since 2005.
Consumer confidence rose in August to its highest level in nearly 18 years. Most Americans feel that jobs are widely available and expect the economy to remain healthy in the coming months, according to the Conference Board’s consumer confidence survey.
In August, factories expanded at their quickest pace in 14 years, according to a survey of purchasing managers. A manufacturing index compiled by a trade group reached its highest point since 2004.
Sales of Existing Homes Drop Again
Not all the economic news has been positive. Higher mortgage rates and years of price increases are slowing the housing market. Sales of existing homes dropped in July for a fourth straight month.
Many economists also worry that President Donald Trump will soon follow through on a threat to impose tariffs of up to 25 percent on $200 billion of imports from China. That would be in addition to $50 billion in duties already imposed.