US adds 162,000 nonfarm jobs in August, far exceeding forecasts

The US labor market delivered a surprise in August, adding 162,000 jobs outside agriculture after losing 23,000 jobs the previous month. The unemployment rate stayed at 4.1%, unchanged from July.

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The job figures have nevertheless been a little weaker over the summer, perhaps partly an effect of the energy price increases that the unrest in the Middle East has brought with it.

The result sharply exceeded expectations. Economists surveyed by Reuters before the report had forecast an average increase of 56,000 nonfarm jobs. Their estimates ranged from a decline of 25,000 to a gain of 121,000.

The stronger figure improved the immediate outlook, but Frederik Engholm, chief strategist at Nykredit, said job growth had remained weak across the summer. He said the trend may have been partly affected by energy price increases linked to unrest in the Middle East. The latest figures made the overall picture look considerably better, he said, but did not change the broader assessment completely.

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Today’s job figures make the picture look considerably better, but they do not change it completely overall.

Tore Stramer, chief economist at Dansk Erhverv, also described the United States as being in a period of weak job growth. He pointed to inflation as a continuing problem for the Federal Reserve, saying consumer price growth remained well above the central bank’s 2% target.

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The bottom line is that US inflation remains significantly above the US central bank’s 2% inflation target.

Stramer said inflation did not appear likely to return to target soon and was still expected to remain above 3% in the coming period. The combination of subdued employment growth and high inflation continues to challenge the US central bank.

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It does not even appear likely to change in the coming period, when inflation is still expected to remain on the wrong side of 3%.