August Payrolls Grew by a Less-Than-Expected, but Unemployment Rate Ticked Down

• The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labour market while also clearing the way for the Federal Reserve to lower interest rates later this month.
• Nonfarm payrolls expanded by 142,000 during the month, up from 89,000 in July, but below the 161,000-consensus forecast from Dow Jones, according to a report Friday from the Labour Department’s Bureau of Labour Statistics. At the same time, the unemployment rate ticked down to 4.2%, as expected.
• The labour force expanded by 120,000 for the month, helping push the jobless level down by 0.1 percentage point, though the labour force participation rate held at 62.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021.
• The household survey, which is used to calculate the unemployment rate and is often more volatile than the survey of establishments, showed employment growth of 168,000. The balance, though, tilted toward part-time employment, which increased by 527,000, while full-time fell by 438,000.
• From a sector standpoint, construction led with 34,000 additional jobs. Other substantial gainers included health care, with 31,000, and social assistance, which saw growth of 13,000. Manufacturing lost 24,000 in the month.
• Markets showed little initial reaction to the data, with stock futures holding negative and Treasury yields also lower. However, stocks sold off later in the session. While the August numbers were close to expectations, the previous two months saw substantial downward revisions. The BLS cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000.
• The recent narrative for the economic data has indicated continuing growth but a slowdown for the labour market. Payrolls processing firm ADP reported Thursday that private companies added just 99,000 jobs in August, while outplacement firm Challenger, Gray & Christmas reported that layoffs surged in August and hiring had hit its slowest year-to-date pace going back to at least 2005.

(Source: CNBC)