The U.S. unemployment rate fell to a seven-year low in August as employers added a modest 173,000 jobs, a key piece of evidence for the Federal Reserve in deciding whether to raise interest rates from record lows later this month.
The U.S. Labor Department said Friday that the jobless rate fell to 5.1% — a level consistent with a normal job market and the lowest since April 2008 — from 5.3%
Hiring in August was the slowest in five months, but the government revised up job growth for June and July by a combined 44,000. From June through August, the economy added a solid 221,000 jobs a month, up from an average of 189,000 from March through May. Three years of solid hiring have put nearly eight million more Americans to work.
Friday's report appeared neither so strong nor so weak as to tilt the Fed decisively toward either a rate hike or against one. But as the final report on the job market before the Fed meets Sept. 16-17, it's one of the most significant pieces of evidence it will consider.
Investors had a muted early reaction to the jobs numbers. Stock index futures were already sharply lower before the report came out and stayed there afterward. The yield on the benchmark 10-year Treasury note edged up to 2.14% from 2.16% late Thursday.
Many economists think the Fed will decide in two weeks to raise its benchmark rate for the first time in nine years. At the same time, stock market turbulence, a persistently low inflation rate and a sharp slowdown in China have complicated the decision.
Once the Fed begins raising borrowing rates, higher rates are likely to eventually ripple through the economy. Americans could face higher costs for mortgages and other loans, though the increases could be modest and gradual.
