US Jobs Report: August Overview

Investing.com — The US economy added fewer jobs than anticipated in August but showed an improvement from a heavily revised July figure, according to Labor Department data.

Nonfarm payrolls increased by 142,000 in August, compared to a downwardly revised 89,000 in July. Economists had predicted an increase of 164,000, up from the initial July estimate of 114,000.

The unemployment rate stood at 4.2%, down from 4.3% in July and consistent with expectations. Average hourly earnings grew by 0.4% after a 0.1% decrease in July.

Analysts at Vital Knowledge commented, “The August jobs report isn’t as bad as feared, but it’s still pretty soft.”

Leading up to this report, data indicated that US private employers hired the fewest workers since 2021 and job openings reached a 3-1/2-year low in July. However, a decrease in jobless claims and growth in services sector activity somewhat alleviated concerns over the labor market.

The nonfarm payrolls data is likely to influence Federal Reserve Chair Jerome Powell’s strategy moving forward. In August, Powell noted the need to adjust monetary policy amid potential job market risks.

Similar sentiments were echoed by other Fed officials. San Francisco Fed President Mary Daly warned that overly tight monetary policy could further slow down US employment.

According to CME Group’s FedWatch Tool, analysts largely expect the Fed to reduce borrowing costs at its upcoming meeting on September 17-18, with current interest rates at a 23-year high between 5.25% to 5.5%.

Following the report, expectations for a deeper 50 basis-point rate cut increased, although analysts from Evercore ISI cautioned that Powell might settle for a 25 basis-point reduction instead.

In market reactions, the rate-sensitive 2-year Treasury yield declined while the 10-year yield recovered earlier losses, leading to a steepening of the yield curve. Stock markets on Wall Street opened mixed, with the US dollar index rising against a basket of currencies.