U.S. Employment Report – August

NEW YORK (Reuters)
U.S. employment increased less than expected in August, with a drop in the jobless rate to 4.2%. This suggests a slow, orderly labor market adjustment, likely negating a significant interest rate cut from the Federal Reserve this month.

Key Highlights:
– Nonfarm payrolls rose by 142,000 jobs in August, following a downwardly revised increase of 89,000 in July, per the Labor Department’s Bureau of Labor Statistics.
– Economists had projected a 160,000 job increase, with estimates ranging from 100,000 to 245,000 jobs.
– Expectations for a larger 50 basis point cut from the Federal Reserve have increased following this report.

Market Reaction:
– STOCKS: S&P 500 E-minis rose by 5.25 points, or 0.1%.
– BONDS: Yield on benchmark U.S. 10-year notes fell by 0.4 basis points to 3.729%.
– FOREX: The dollar index decreased by 0.02% to 101.02.

Expert Comments:
– Gennadiy Goldberg, Head of U.S. Rates Strategy, TD Securities:
“The market is torn between justifying a 25 or 50 basis point rate cut, depending on how they interpret the data.”
– Lou Basenese, President and Chief Market Strategist, MDB Capital:
“With the lower-than-expected payroll additions and downward revisions, rates must decline. Stocks will be under pressure until the Fed clarifies its cuts.”
– Drew Matus, Chief Market Strategist, MetLife Investment Management:
“Payroll growth was adequate. The Fed’s likely to act more cautiously in September.”
– Karl Schamotta, Chief Market Strategist, Corpay:
“Despite evidence of labor market deterioration, at least one significant rate cut is anticipated in the coming months.”
– Michael Brown, Senior Research Strategist, Pepperstone:
“The report adds to the debate over the Fed’s September meeting; a mixed picture complicates whether a 50bp or 25bp cut is appropriate.”
– Matt Rowe, Head of Portfolio Management, Nomura Capital:
“The unemployment rate at 4.2% signals no immediate crisis in the labor market. The reported numbers should not foreshadow an impending recession.”

(This story has been corrected to fix the dateline to Sept. 6 from Sept. 5)