There was a drop of 4,000 jobs in the United States in August, which was the first decline since August 2003, the Associated Press (AP) reported Friday. The unemployment rate held steady at 4.6 percent, the U.S. Labor Department said Friday. Economists were forecasting payrolls to grow by 110,000, making the high unemployment rate and the payroll cuts unprecedented. The 4,000 jobs cut in August are from both private and government employers. The government actually cut 28,000 jobs, while all private employers added 24,000. Economists increasingly believe the Federal Reserve will lower a key interest rate, now at 5.25 percent, by at least one-quarter percentage point when it meets next on September 18. The Federal Reserve has not lowered this rate in four years. Those with employment are seeing some wage gains. Average hourly earnings rose to $17.50 in August, a 0.3 percent increase from July. Over the past 12 months, wages are up 3.9 percent, which matched economist's forecasts. The modest wage growth could ease inflation fears, giving the Federal Reserve more room to cut interest rates. The economy, which grew at a brisk 4 percent pace in the April-to-June period, is expected to slow to half that pace in the three months from July through September. Against this backdrop, the unemployment rate is expected to creep higher, reaching close to 5 percent by the end of the year.
