US job creation slows in August

US employers added jobs in August, but fewer than in July

The rate of US jobs growth cooled in August, with 169,000 new positions being created, according to official figures from the Labor Department.

The figure was lower than expected and down from July's revised 242,000 total.

However, month-on-month US unemployment dropped by 0.1% to 4.9% in August, reaching a four-year low.

The figures do not include the affect of Hurricane Katrina, as they were collated before the storm hit Louisiana and other southern states.

...Because of that [Katrina], this is going to take somewhat of a backseat Analyst Bennett Gaeger

Analysts had expected that August's job creation figure would dip from July, but predicted that it would only fall to 190,000.

Disappointment

Al Goldman, chief market strategist at AG Edwards, said the latest data from the Labor Department had been completely overshadowed by recent events in the Gulf of Mexico.

"[I'm a] little disappointed... but this won't be a major market impact, the market is totally focused on Katrina," he said.

September's jobs data will show the impact of the hurricane.

Across all sectors of the US economy, 57.2% of businesses added workers during August.

In general services 156,000 jobs were created, 43,000 in health, 29,000 in professional and business services, and 34,000 in leisure and hospitality.

Yet the manufacturing sector was down again, losing 14,000 jobs in August, falling for the third straight month.

Hurricane effect

US employment is up 1.43 million so far in 2005, an average of 178,000 per month.

"It would be a higher-priority number we would be looking at without the storm," said Bennett Gaeger of Legg Mason Wood Walker.

"But because of that, this is going to take somewhat of a backseat.

"In light of what's going on in the south, the question is what's going to influence Fed action going forward."

Katrina's unemployed

Analysts believe Katrina could greatly affect September's jobs figures, with people having no job to return to in affected areas, particularly New Orleans.

"New Orleans is an economic disaster," said Rajeev Dhawan, director of the economic forecasting project at Georgia State University.

"This tragedy is so unprecedented people could be out of work for three, six, nine months or longer."

Mr Dhawan estimates that close to one million people have been thrown out of work across the affected areas.