U.S. employment rose less than expected in August, but a drop in the unemployment rate to 4.2 percent suggested the orderly slowdown in the labor market continued and probably did not justify a big interest rate cut by the Federal Reserve this month.
Nonfarm payrolls rose by 142,000 jobs last month after a downwardly revised increase of 89,000 in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs after a previously reported increase of 114,000 in July. Estimates ranged from 100,000 to 245,000 jobs.
The smaller-than-expected increase in payrolls is unlikely to indicate a deterioration in labor market conditions.
August payrolls tend to be initially weaker relative to the consensus estimate and recent trend before being revised up later. Hiring typically picks up in the education sector, as predicted by the model the government uses to iron out seasonal fluctuations in the data.
However, the start of the new school year varies across the country, which can alter so-called seasonal factors. Initial August payroll figures have been revised upward in 10 of the past 13 years. Layoffs remain at historically low levels.
The drop in the unemployment rate followed four straight monthly increases, which had pushed it close to a three-year high of 4.3% in July. As of early Friday, financial markets were pricing in a roughly 43% chance of a half-point rate cut at the Fed’s Sept. 17-18 policy meeting, according to CME Group’s FedWatch tool. The odds of a 25-basis-point rate cut were around 57%.
Average hourly earnings rose 0.4% in August after falling 0.1% in July. Wages rose 3.8% year-over-year after advancing 3.6% in July. Still-solid wage growth continues to support the economy through consumer spending.
[Con información de Reuters]
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