U.S. job growth moderated in August from a blistering pace in the previous month, but jobs remained strong despite headwinds from rising interest rates, blistering inflation and growing recession fears. Did.
Employers added 315,000 jobs in August, the Labor Department said in its monthly payroll report released on Friday, in line with the 300,000 jobs projected by economists at Refinitiv. This is his first monthly rise since April 2021 and is down significantly from his 526,000 jumps recorded in July.
Meanwhile, the unemployment rate unexpectedly rose to a six-month high of 3.7% as the labor force participation rate rose.
Wages also continued to rise, but were below expectations. The average hourly wage he increased by 0.3% in one month and increased by 5.2% over the previous year. This is slightly below Refintiv’s estimates of 0.4% and 5.3%, respectively.
Fed raises rates by 75 basis points in another historic move to combat inflation
The market reacted positively to the news, narrowing its losses this week. Friday morning, the Dow soared over his 100 points.
“The labor market is heading in the right direction for policymakers,” said Jeffrey Roach, chief economist at LPL Financial. It means that you are not under pressure.”
Job gains were broad-based in August, with Professional and Business Services leading hiring, adding 68,000 new workers. This was followed by healthcare (48,000), retail (44,000) and manufacturing (22,000). Employment in financial activities he increased by 17,000.
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Monthly job posting data is always important, federal reserve We’ll be keeping a close eye on this particular report for signs that the labor market is starting to slow from a frenetic pace as policymakers grapple with inflation.
“This report does not change the Fed’s policy as a 75 basis point rate hike is still under consideration at its September meeting,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. rice field. “The upcoming CPI report will likely determine how aggressive the Fed will need to be in the near term, with a 4.0% Fed fund cut by the end of the year if the string of strong economic data continues. It wouldn’t be surprising to see a rate…”
Federal Reserve Chairman Jerome Powell surprised markets last week with his keynote address in Jackson Hole, Wyoming. In it he renewed the specter of an increasingly hawkish Fed determined to fight inflation regardless of its potential economic consequences.
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“Higher interest rates, slower economic growth and a weaker labor market will keep inflation down, but will also cause some pain for households and businesses,” Powell said. “These are the unfortunate costs of keeping inflation under control, but failure to restore price stability will be far more painful.”
New York Fed President John Williams has warned that interest rates are likely to continue rising for the foreseeable future. Meanwhile, Cleveland Fed President Loretta Mester has dashed Wall Street hopes of a 2023 rate cut by predicting the benchmark rate will exceed 4% by early next year.
“The current view is that the federal funds rate needs to be raised above 4% by early next year and held there,” Mester said in a prepared speech to an event hosted by the Dayton Area Chamber of Commerce. ‘ said. “I don’t think the Fed will lower its federal funds rate target next year.”
For months, the labor market remained one of the economy’s few bright spots, with the economy adding more than 2 million jobs in the first half of the year. Additionally, earlier this week, the government reported that job openings had surpassed her 11.2 million.
Alphabet Inc.’s Google, Walmart, Apple, Meta, Microsoft and many other companies have announced hiring freezes and layoffs in recent weeks, another sign the labor market is starting to weaken.
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Moreover, payroll firm ADP’s data on Wednesday showed employment cooling in August, with private firms adding only 132,000 new jobs, the lowest since May.
The Department of Labor also cut the number of jobs for June to 293,000 from 398,000 and for July to 526,000 from 528,000.