The U.S. economy continued to add jobs in August, but it was the opposite story in the retail sector.
Non-farm payrolls grew by 201,000 jobs last month, according to the Labor Department, beating the consensus forecast of 190,000, while the unemployment rate remained unchanged at 3.9 percent.
Job gains occurred in professional and business services, health care, wholesale trade, transportation and warehousing, and mining, but clothing stores and department stores shed 20,800 and 9,200 jobs respectively over the month.
Accompanying the strong overall jobs numbers was a 2.9 percent rise in average hourly earnings to $27.16, the highest level in nine years, which fueled speculation that the Federal Reserve would continue with its rate hikes.
Charles Seville, head of North American sovereigns at Fitch Ratings, said: “This is a strong report, both in terms of job creation and growth in average hourly earnings, and it’s only likely to confirm the Fed’s intention to raise rates at the next meeting.”
Consumers have already seen seven — albeit small — increases since 2015 and two more are expected this year. So far they’ve taken the increases in stride as the rises have been gradual, but that will get more difficult as rates creep upward and push borrowing costs higher.
According to Andrew Hunter, U.S. economist at Capital Economics, the Fed will most likely raise rated by a quarter point at its next meeting in two weeks’ time.
“The continued strength of the labor market keeps the Fed firmly on track to raise interest rates twice more this year, starting with a 25 basis point hike at the FOMC meeting in two weeks’ time,” he said.