Employment in the month of August fell by much less than economists had been expecting, according to a report released by the Labor Department on Friday, with the report also showing a much smaller than previously reported drop in employment in July.
The report showed that non-farm payroll employment fell by 54,000 jobs in August, matching the revised decrease in jobs seen in July. Economists had expected employment to fall by about 120,000 jobs compared to the loss of 131,000 jobs originally reported for the previous month.
While government employment showed a notable decrease due to the elimination of 114,00 temporary census jobs, private sector employment increased for the eight consecutive month, rising by 67,000 jobs.
The continued private sector job growth reflected a notable increase in employment in the education and health services industry, which rose by 45,000 jobs in August.
Employment in the professional and business services and construction industries also showed notable growth, while employment in the manufacturing sector fell by 27,000 jobs due to the loss of 21,600 jobs at motor vehicle and parts makers.
The drop in manufacturing employment reported by the Labor Department is at odds with a report from the Institute for Supply Management, which said its reading on employment in the manufacturing sector rose to 60.4 in August from 58.6 in July. A reading above 50 indicates employment growth.
Despite the smaller than expected decrease in non-farm employment, the unemployment rate still edged up to 9.6 percent in August from 9.5 percent in July. The modest increase in the unemployment rate came in line with economist estimates.
"Double dip fears will dissipate on the back of this result, though we suspect that the U.S. labor market is not out of the woods yet," said Rob Carnell, chief international economist at ING. "Employment growth is still insufficient to stabilize the unemployment rate."
He added, "We also suspect that employment growth will struggle to attain the 140K+ employment growth it will need in order to prevent unemployment from going up. The Fed will eventually have to act again. Just not for a while yet."
The report also showed that employees' average hourly earnings rose by 0.2 percent to $22.66 in August from $22.60 in July. Compared to the same month a year ago, average hourly earnings are up 1.7 percent.
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