Payrolls rise more than expected, unemployment rate jumps
By Michele Maatouk
Date: Friday 01 Sep 2023
(Sharecast News) - The US economy added more jobs than forecast in August but an unexpected jump in the unemployment rate, cooling wages and revisions to the previous months' data raised expectations the Federal Reserve will pause on rates this month.
According to figures released on Friday by the Bureau of Labor Statistics, non-farm payrolls rose by 187,000 from July, coming in ahead of expectations for a 170,000 increase.
However, the data for July was revised down to show 157,000 jobs were created, from 187,000 initially reported. The change for June was also revised down, to show a 105,000 jump from an initial estimate of a 185,000 gain.
The unemployment rate pushed up to 3.8% in August from 3.5% the month before, versus expectations for it to remain unchanged.
The figures also showed that average hourly earnings rose 0.2% on the month - the smallest increase since February 2022 - and 4.3% on the year.
ING economist James Knightley said: "The US August jobs report shows modest jobs growth, benign wage pressures and a large jump in the unemployment rate as the labour market slackens. With inflation set to continue slowing, the Fed is surely not hiking interest rates in September and is unlikely to do so in November either."
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The big surprise here is the jump in the unemployment rate, which is - unusually - statistically significant. It was triggered by a huge 736K jump in the labour force, which far outstripped the reported 222K gain in household employment and raised the participation rate by 0.23%, also statistically significant, just.
"As always, month-to-month movements in all household survey data must be viewed with extreme caution; they are deeply unreliable and the August swings could easily reverse in September. But the August headline unemployment rate is the highest since February 2022, and appearances matter, especially coming just a week after Chair Powell said he wanted to see a further 'rebalancing' in the labor market. Well, here it is - at least until the September report is released, but that's after the next FOMC meeting.
"The hourly earnings numbers also surprised in the right direction for the Fed, with the 0.2% increase following back-to-back 0.4% gains. These hefty increases are out of step with surveys and other indicators pointing to slower wage gains, so we think it likely that the August print marks the start of a renewed softening. Again, one month proves nothing, but no further wages data will be released before the Fed meeting."
He added: "More immediately, this report clearly increases the pressure on the Fed not to hike this month, and it would now take horrific PPI and CPI data to trigger action. We remain of the view that the Fed is done, and that the next move will be an easing, as soon as next March."
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN