Stockmarkets in the US have opened lower after employment numbers showed the country created fewer jobs than expected in July.
US Labor Department data shows a 162,000 increase in payrolls last month. This is the smallest rate of job growth in four months and comes below the 185,000 predicted by economists. In addition, the US unemployment rate fell from 7.6 per cent to 7.4 per cent.
The Dow Jones, S&P 500 and Nasdaq all fell after opening, while the FTSE 100 was also showing losses.
US labor secretary Tom Perez says: “This report is good news, and the economic turnaround over the past four years has been unmistakable. More Americans are finding work, but we can and must do more to pick up the pace of this recovery.”
Despite disappointment at the scale of job creation, economists say the numbers are not weak enough to stop the Federal Reserve from opting to taper its $85bn-a-month bond-buying programme later in the year.
Capital Economics chief US economist Paul Ashworth says: “The 162,000 increase in US non-farm payrolls was a little below the consensus forecast at 185,000, but this isn’t going to stop the Fed from reducing its monthly asset purchases at September’s FOMC meeting, particularly not when the unemployment rate dropped to a four-and-a-half-year low of 7.4 per cent from 7.6 per cent.”
Ashworth adds that there are “a few causes of concern” in the Labor Department’s figures. These include a downward revision of 26,000 to May and June’s combined payroll growth, falls in average earnings and average weekly hours, and a drop in the size of the labour force.
“Overall, while July itself was a bit disappointing, the Fed will be looking at the cumulative improvement since it restarted its asset purchases last September. On that score, the unemployment rate has fallen from 8.1 per cent last August, to 7.4 per cent this July, which is a significant improvement,” the economist says.