U.S. hiring drops amid other solid indicators

WASHINGTON – A surprising drop in hiring and in the number of people seeking work in August sent a reminder that the U.S. economic recovery is still prone to temporary slowdowns.

Employers added just 142,000 jobs last month, well below the 212,000 average of the previous 12 months. The unemployment rate fell to 6.1 percent from 6.2 percent. But that was because more people without jobs stopped looking for one and were no longer counted as unemployed.

Analysts took Friday’s Labor Department report in stride. They noted that other gauges of the economy – from manufacturing and construction to auto sales – remain solid. Layoffs have dwindled, too. Analysts also noted that month-to-month volatility in hiring is common even in a healthy economy.

But the dip in hiring also suggests that, though the Great Recession officially ended more than five years ago, the economy has yet to shed some of its lingering weaknesses. Held back by sluggish pay growth, for example, consumers continue to spend cautiously.

The figures “will inevitably spark speculation that the U.S. recovery is somehow coming off the rails again,” said Paul Ashworth, an economist at Capital Economics. “However, we’re not too concerned by what is probably just an isolated blip.”

The report showed the smallest job gains in eight months. The weaker-than-expected numbers make it unlikely that the Federal Reserve will speed up its timetable for raising interest rates. Most analysts expect the first rate hike about mid-2015.

August’s job figures tend to be unusually volatile and are typically revised later, said Patrick O’Keefe, director of economic research at CohnReznick.