A better-than-expected report on the US labour market on Friday indicates the economy is poised for modest growth ahead and is likely to avoid a slide back into recession, analysts said.
The US economy generated 39 000 non-farm jobs in August and the unemployment rate dipped to 5,7% from 5,9% in July, the US Labour Department said.
The agency also revised its figures for the prior two months. In July, payrolls rose a revised 67 000, up from the initial estimate of a 6 000 rise while job growth in June was revised downward to a gain of 34 000 from the previous estimate of a 66 000 rise.
”The bottom line on this employment report is that it is OK — not decisively weak, yet not strong,” said Dick Rippe of Prudential Securities. ”It is, however, in line with an economy that is gaining at a slow, but positive pace.”
Economists view the labour report as crucial to US economic prospects because jobs need to be added to maintain consumer spending, which accounts for about two-thirds of US gross domestic product.
Wall Street reacted positively to the report, with the Dow Jones industrials up 1,7% and the Nasdaq closing 3,54% higher.
The report, said most market watchers, was just strong enough to keep the US economy out of a feared ”double-dip” recession, while not weak enough to prompt a rate cut by the Federal Reserve to help stimulate growth.
”The labour market may not be totally hale and hearty, but it is far from falling apart,” said Joel Naroff of Naroff Economic Advisors.
”Today’s data will again confound investors looking for table-pounding calls for a boom or bust economy, when a choppy, gradual and modest recovery seems most likely,” added Steven Wieting of Salomon Smith Barney.
But economists remained concerned about the loss of
manufacturing jobs, which was offset by growth in government and service sector jobs.
Manufacturing jobs fell 68 000 in August, the largest decline since January. Construction jobs rose by 34 000 in August after falling 30 000 in July. – Sapa-AFP