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U.S. Payroll Growth Stalls in August, Bolstering Case for Fed Rate Cuts
U.S. nonfarm payrolls rose by just 22,000 in August, significantly missing economists’ expectations of 75,000 and marking a decline from the 73,000 jobs added in July, according to the Bureau of Labor Statistics. Revisions to previous reports showed job growth for earlier months was also weaker than initially reported, with June experiencing a rare decline of 13,000 jobs.
The unemployment rate edged up to 4.3%, in line with forecasts. Meanwhile, wage growth showed signs of moderation. Average hourly earnings increased by 0.3% month-over-month in August, meeting expectations but reflecting a slower pace than in July. On a year-over-year basis, wage growth eased to 3.7% from 3.9%.
There was a slight uptick in labor force participation, which rose to 62.3%. This suggests that more workers are returning to the job market, even amid softer demand for new hires.
These latest labor market indicators are reinforcing speculation that the Federal Reserve may soon resume interest rate cuts. Fed funds futures are now reflecting expectations of two consecutive 25-basis-point rate reductions—in September and October—rather than a single, larger cut. Fed Chair Jay Powell has noted the labor market remains in a “curious balance,” with waning hiring demand constrained further by immigration restrictions limiting available labor supply.
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