The United States added 315,000 nonfarm payroll jobs in August, slightly exceeding forecasts predicting 300,000 new jobs for the month. This represents a decrease over the 528,000 jobs added in July. The data comes a week after Fed Chair Jerome Powell talked about a slowing economy and possible rising unemployment as the Federal Reserve plans to tighten monetary policy to combat inflation.
US Hiring Slows Down in August
In July, the US had added 528,000 jobs beating the consensus forecast of 372,000 by a wide margin. While hiring still remains strong, the recently released numbers show that it is indeed slowing down as expected.
The unemployment rate for August was 3.7%, higher than July’s 3.5%. The labor force participation was 62.4%, higher than the 62.1% recorded in July. The average hourly earnings rose by 0.3% compared to July, standing at $32.36 in August.
August’s Employment Situation Report Highly Relevant to Fed’s Decision
Many analysts had expected August’s employment situation report to be highly relevant to Federal Reserve’s decision on the interest rate hike due this month. According to Michael Gapen, chief US economist at Bank of America, the report could be more important than the CPI print in determining the Fed’s next move.
The view from market participants is the employment report is more important than the CPI inflation report in determining whether a 75 basis point or larger hike in September is more appropriate than a 50 basis point hike, and I think that’s the right view.
A strong labor market could signal the need for more aggressive interest rate hikes, with the general consensus being a 75 BPS hike given the current market conditions. Speaking at the Jackson Hole Economic Symposium last week, the Fed Chair reiterated his commitment to bring inflation down to the target rate of 2%, indicating the hawkish stance to continue for the near term.
This article originally appeared on The Tokenist
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