Unemployment in the US fell marginally during August to 6.1 per cent but a decline in nonfarm payroll data could point to signs of weakness in the economy.
Data released today by the US Bureau of Labor Statistics shows the unemployment rate dropped to 6.1 per cent in August compared to 6.2 per cent recorded for the previous month.
However the latest nonfarm payroll data from the bureau reveals that the economy added 142,000 jobs during the month well below the consensus forecast of 230,000, according to Capital Economics, and marking the smallest gain in 2014.
The drop in the US unemployment rate over the month of August is also largely due to the shrinking of the labour force by 64,000, says Capital Economics chief US economist Paul Ashworth
Ashworth says the fall in nonfarm payrolls will “inevitably spark speculation that the US recovery is somehow coming off the rails again.”
But August’s weaker data will likely be short lived, adds Ashworth. He says: “However, we’re not too concerned by what is probably just an isolated blip.
“Other indicators suggest that labour market conditions are still strengthening and the latest round of survey evidence indicates that economic activity is soaring.”
With the unemployment rate also continuing to decrease Ashworth maintains his forecast that the Fed will aim to raise rates “a little earlier than many others expect” in March 2015.