NEW YORK — The American economy improved in August, but not as much as people had hoped.
The U.S. economy added 173,000 jobs in August, a decent gain that was below expectations and might have dimmed the chances of the Federal Reserve raising its key interest rate in two weeks. Economists surveyed by CNNMoney projected that the economy would add 207,000 jobs.
The unemployment rate was 5.1% in August, down to its lowest level since April 2008.
In addition to the lukewarm jobs gains, wages didn’t grow much in August either. Wages only rose 2.2% in August, about in line with expectations but well below the Federal Reserve’s 3.5% target.
Wage growth has been missing during the U.S. economic recovery from the recession, and it’s also a key measure of inflation — something that’s been absent and that the Fed badly wants to see.
Overall the job numbers in August add more uncertainty surrounding a potential rate hike from the Federal Reserve in two weeks. Fed officials have said they wanted to see key economic data like the jobs report before deciding on a rate hike. Although the U.S. economy has been good, this report is not a resounding victory for the American economy.
Concerns about a global economic slowdown and volatility in stock markets had already lowered the chance of a rate hike in September. This jobs report reinforces those concerns.
It would be the Fed’s first rate hike in almost a decade and a sign of a healthy U.S. economy. A rate hike will matter to millions of Americans on a range of topics, and it will be a major event for world financial markets. But it may not come in two weeks.