LONDON (Dispatches) - The U.S. economy added fewer jobs than expected in August as employment rose by 235,000.
The figure was well down on the 1.05 million jobs created in July, adding to fears that the recovery from the pandemic may be running out of steam.
Despite the disappointing hiring levels, the unemployment rate fell to 5.2% in August from 5.4% in July.
Economists say rising infections caused by the Delta variant have hit spending on travel, tourism and hospitality.
They also note that the Labor Department’s data was collected in the second week of August, so does not reflect the impact of hurricanes Ida and Henri in the second half of the month.
“The staggering weakening we’ve seen in August’s labor activity is a sign that the Delta variant is having a hugely damaging impact, which will in turn hit growth and confidence,” said Robert Alster of Close Brothers Asset Management.
“But conversely, strong labor data - as seen in June and July’s non-farm payrolls - would push the [Federal Reserve] towards a more hawkish approach to monetary policy, with a tapering of asset purchases as soon as November and a rate rise in 2022.
“This runs the risk of stifling U.S. growth before it has had a chance to bed in,” he added.
In August in professional and business services, transportation and warehousing, private education and manufacturing.
However, employment declined in retail and was flat in leisure and hospitality, after increasing by an average of 350,000 per month over the previous six months.
While the number of people unemployed edged down to 8.4 million, it remained well above the pre-pandemic level of 5.7 million seen in February 2020.
The dollar fell on foreign exchange markets after the announcement.