In August, the US job market experienced a slower growth than anticipated.
Dow Jones had predicted a 161,000 increase in nonfarm payrolls, but the actual number was 142,000. This reflects a contraction of labour demand.
The Federal Reserve may lower interest rates in the coming months due to this slowdown.
As expected, the unemployment rate dropped to 4.2% while the rate of labour force participation remained at 62.7%.
Source: CNBC
Although August’s numbers are higher than the 89,000 revised in July, they still fall below the consensus estimate of 161,000.
Bureau of Labor Statistics data (BLS), released by the Bureau on Friday, highlights a continued deceleration of job creation in an uncertain economic environment.
The Federal Reserve may be influenced by the slowdown in the economy to make decisions about monetary policy.
The unemployment rate decreased slightly to 4.2% but the labor force increased by 120,000 people, maintaining the steady rate of participation at 62.7%.
The underemployment rate, including discouraged workers, and those who have part-time work for economic reasons rose from 7.9% to 8.9%.
The level of unemployment is at its highest since October 20, signaling hidden pressures on the labor market.
Source: CNBC
Bureau of Labor Statistics has revised downward the job growth numbers for the two preceding months.
The July numbers have been reduced by 25,000, which brings the total down to 89,000. June’s revision was more substantial, with a reduction of 61,000 to 118,000.
This adjustment suggests that the US labour market is weaker than originally reported. It also adds to the concerns over the US economic strength.
US Construction Leads, Manufacturing Lags
August saw a wide range of performance across a number of sectors.
The construction industry was a strong performer, adding over 34,000 new jobs. This shows resilience in the face of economic uncertainty.
Social assistance and healthcare both grew, with 31,000 new jobs added in the sector of health care.
Manufacturing suffered a blow, with 24,000 lost jobs in the last month.
Mixed sector performances indicate that some sectors are still strong while others feel the pressure of economic headwinds.
Wage growth beats expectations
Wages showed a stronger-than-expected increase in August.
The average hourly wage grew 0.4% from month to month and by 3.8% annually, exceeding the expected 0.3% and 3,7%.
The Federal Reserve may be tempted to cut rates in order to boost economic activity, but this robust wage growth will complicate its task.
This slight rise in the number of hours per week to 34.4 underscores further inflationary pressure.
Stocks and Treasury yields are stable
Market reaction to August’s employment report has been relatively muted.
The yields on Treasury bonds and stock futures both fell.
Investors may have already priced in the possibility that the Federal Reserve will cut rates.
The central bank will have to balance a number of factors in the upcoming meeting, as the labour market is showing signs of cooling while wage growth continues.
Economic data is key to Fed’s decisions
This month’s jobs report paints a picture that is not entirely positive.
Even though job growth has slowed, wages and unemployment rates have remained stable.
The Federal Reserve may be tempted to cut rates in order to boost economic growth, but these mixed signals could complicate their policy.
Stronger-than-expected wage growth could prompt a more cautious approach.
In the weeks ahead, as the markets wait for the Fed to make its next move in monetary policy, the economic indicators will be crucial in determining monetary policies.
The post US payrolls fall by 142,000 jobs in August and miss the estimates, as unemployment drops to 4.2% could be updated as new information unfolds
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