ANKARA
The U.S. economy added fewer jobs than the economist consensus forecast in August, the ADP Employment report showed.
The private sector saw employment increase by 190,000 jobs; analysts had forecast an increase of 200,000.
In terms of sectors, the services sector added the largest number of jobs, with employment increasing by 173,000, the report said. The professional and business sector employment increased by 29,000 jobs. Trade, transportation and utilities added 28,000 jobs.
Small companies saw the largest increase in terms of company size, adding 85,000 jobs.
With jobs increasing at a level below analyst forecasts, the Federal Reserve could delay its decision to raise interest rates which is widely expected in September. Should the unemployment report from the Labor Department on Friday also prove disappointing, additional pressure will be put on the Fed to hold rates for now.
But economists said that there were still good reasons for the Fed's rate hike to come soon, citing overall progress on unemployment. Unemployment is at 5.3 percent, down from about 10 percent in 2012.
"The good reasons for raising rates have to do with accumulated progress. Yes, growth isn’t spectacular, but the Fed has made considerable progress towards fulfilling its mandate. Unemployment has halved, from 10 percent to 5 percent, with around 12 million jobs created [in the past two years]," commented Lombard Street Research economist Dario Perkins.
"Inflation is still below target, but this partly due to time lags. It is not clear the situation justifies the continuation of emergency measures introduced in 2008-09 when the economy was in free fall. It is also important to remember that higher short-term interest rates are hardly a disaster for the U.S. economy. If long-term rates stay low and there is no further surge in the dollar, the economy can cope with a higher Fed policy rate," Perkins explained.
