American hires slow down. The economy added 130,000 jobs in August

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Employers added 130,000 jobs in August. The unemployment rate remained stable at 3.7%.

The economy has created jobs for 107 consecutive months, but the pace of hiring has recently slowed. The United States has created a monthly average of 158,000 jobs this year, up from 223,000 in 2018.

The hiring has benefited from a significant boost ahead of the US Census next year, with the government hiring 25,000 temporary employees to participate in the national project.

Wages increased 3.2% over the last year. It was a little better than economists had expected and could help with inflation, which remained stubbornly low.

The African-American unemployment rate dropped from 6% to 5.5%. This was a record low for data collected since 1972. This drop is mainly due to the sharp drop in the unemployment rate of black women.

The unemployment rate among Hispanics increased from 4.5% to 4.2%. The race-based unemployment rate is sometimes unstable.

The cracks begin to show

Despite a strong overall employment situation, weaknesses are starting to appear.

"This may be due in part to the difficulty of finding workers with the right skills, with unemployment accounting for only 3.7%," said James Knightley, chief economist at ING. "However, given the growing caution around the international environment and trade-related uncertainties, companies can also be increasingly cautious about hiring."

The escalation of the trade war between the United States and China has created uncertainty about hiring in sectors suffering the repercussions of tariffs, such as the manufacturing sector.

Only 3,000 jobs were created in this sector last month, which is below expectations – half of this year's average is 6,000 and less than a quarter over the July figure. In 2018, the number of jobs in the manufacturing sector increased on average by 22,000 per month.

The US manufacturing sector contracted for the first time in three years in August, according to the Institute of Supply Management.

"The trade war does not push the economy over a cliff and recession clouds do not blacken the sky, but the outlook remains uncertain as tariff barriers in China are not yet to the point, "said Chris Rupkey, chief economist of finance. at MUFG.

Can the Fed save the day?

The cooler August report adds to expectations that the Federal Reserve will cut interest rates later this month, the second time this year. In July, the central bank made its first cut since the 2008 financial crisis.

Expectations for a quarter point cut at the September 18 meeting are at 94%.

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