The stronger-than-expected jobs data could complicate the Federal Reserve’s rate decision later this month, with markets still split over whether policymakers will raise rates or hold them steady
US employers added 162,000 jobs in August, sharply exceeding economists’ expectations and offering fresh evidence that the labour market remains resilient despite signs of cooling.
The nonfarm payroll increase reported by the US Bureau of Labor Statistics on Friday was nearly three times the 55,000 jobs economists had expected. July’s figure, initially reported as a loss of 23,000 jobs, was revised upwards to a gain of 21,000.
The unemployment rate remained unchanged at 4.1 per cent.
Average hourly earnings increased 0.3 per cent in August from the previous month, matching economists’ expectations. The wage data will be closely watched by the Federal Reserve as it assesses whether inflationary pressures are easing sufficiently.
What the jobs data means for the Fed
The report comes less than two weeks before the Fed’s September 15-16 policy meeting, where officials will decide whether to raise interest rates or leave them unchanged.
Markets had reduced expectations for a rate hike ahead of Friday’s report after Fed Governor Christopher Waller said on Thursday that he would favour keeping rates steady if incoming data confirmed that inflation pressures were cooling.
Before the jobs report, financial markets were pricing in roughly a 52 per cent probability of a rate hike at the September meeting, down from 63.2 per cent a day earlier, according to CME’s FedWatch tool.
More from BusinessThe stronger payroll figure could now revive expectations for tighter monetary policy. At the same time, the Fed faces concerns about the broader health of the economy and the impact of elevated borrowing costs.
Labour market shows mixed signals
The August payroll report follows several indicators that had pointed to a cooling US labour market.
The Labor Department’s Job Openings and Labor Turnover Survey showed 7.3 million job openings in July, little changed from the previous month. The figures suggested that hiring demand had stabilised rather than collapsed.
Payroll processor ADP reported that private employers added just 38,000 jobs in August, below the 47,000 expected by economists. Healthcare accounted for most of the increase, while manufacturing and professional services lost jobs.
Layoff announcements also declined. Outplacement firm Challenger, Gray & Christmas recorded 53,000 planned layoffs in August, making it the slowest August for announced job cuts since 2022.
Initial applications for unemployment benefits, meanwhile, edged up to 206,000, slightly above economists’ forecast of 205,000.
Which sectors added jobs?
Leisure and hospitality again accounted for a significant share of employment gains in August, helping offset declines in sectors including financial services and information.
The sectoral data suggest that hiring remains uneven rather than broadly accelerating across the economy.
The stronger headline payroll number also comes against a backdrop of weaker economic momentum earlier in the summer. The US labour market had slowed after strong gains in the spring, with higher energy costs and supply-chain disruptions adding to pressure on businesses.
