Hiring picked up in August as U.S. employers added a strong 201,000 jobs, a sign of confidence that consumers and businesses will keep spending despite the Trump administration’s conflicts with U.S. trading partners.
The Labor Department said Friday that the unemployment rate remained 3.9 per cent, near an 18-year low.
Americans’ paychecks grew at a faster pace in August. Average hourly wages rose last month and are now 2.9 per cent higher than they were a year earlier, the fastest year-over-year gain in eight years. Still, after adjusting for inflation, pay has been flat for the past year.
The economy is expanding steadily, fueled by tax cuts, confident consumers, greater business investment in equipment and more government spending. Growth reached 4.2 per cent at an annual rate in the April-June quarter, the fastest pace in four years.
Most analysts have forecast that the economy will expand at an annual pace of at least 3 per cent in the current July-September quarter. For the full year, the economy is on track to grow 3 per cent for the first time since 2005.
Consumer confidence rose in August to its highest level in nearly 18 years. Most Americans feel that jobs are widely available and expect the economy to remain healthy in the coming months, according to the Conference Board’s consumer confidence survey.
The buoyant mood is lifting spending on everything from cars to restaurant meals to clothes. Consumers’ enthusiasm is even boosting such brick-and-mortar store chains as Target, Walmart and Best Buy, which have posted strong sales gains despite intensifying competition from online retailers.
In August, factories expanded at their quickest pace in 14 years, according to a survey of purchasing managers. A manufacturing index compiled by a trade group reached its highest point since 2004. Measures of new orders and production surged, and factories added jobs at a faster pace than in July.
Not all the economic news has been positive. Higher mortgage rates and years of rapid price increases are slowing the housing market. Sales of existing homes dropped in July for a fourth straight month.
And wages are still rising only modestly, even after more than nine years of economic expansion and an ultra-low unemployment rate.
Many economists also worry that President Donald Trump will soon follow through on a threat to impose tariffs of up to 25 per cent on $200 billion of imports from China. That would be in addition to $50 billion in duties already imposed. That move could shave as much as a quarter-point off growth over the next year, Mark Zandi, chief economist at Moody’s Analytics, has estimated.
For now, there’s little sign that companies are worried enough about a trade war to slow hiring. Businesses are increasingly reluctant to even lay off workers, in part because it would be difficult to replace them at a time when qualified job applicants have become harder to find.
On Thursday, the government said the number of people seeking unemployment benefits — a proxy for layoffs — amounted to just 203,000 last week, the fewest total in 49 years.