Unemployment Falls to 4-year Low in August

- The Change in Non-farm Payrolls for August was 169K versus estimates of 190K and an upwardly revised 242K in July.
- The Unemployment Rate for August fell to 4.9% versus estimates of 5.0% and 5.0% in July.
- Average Hourly Earnings for August rose .1% versus estimates of a .2% gain and a .4% increase in July.

BOTTOM LINE: US employers added 169,000 workers in August, signaling a confidence in the economy that will be tested by the further surge in fuel prices following Hurricane Katrina. The Unemployment Rate fell to 4.9%, the lowest rate in 4 years, Bloomberg reported. Employers added jobs in the month as consumer spending and confidence remained strong. However, the director of the White House National Economic Council said today that about 1 million workers have been displaced by Katrina. Monster Worldwide’s index of online help-wanted ads in the US had risen to an all-time record in August before the hurricane. I expect the job market to temporarily weaken over the next few months before rebounding sharply around year-end/early next year.