August’s US Job Growth Plummets, Igniting Hopes for a Fed Rate Cut
The US labor market exhibited a significant downturn in August, with employers adding a mere 22,000 jobs. This figure falls drastically short of the anticipated 75,000, as reported by the Bureau of Labor Statistics on Friday.
This represents a sharp deceleration from July’s revised gain of 79,000 jobs, marking one of the most feeble monthly job creation figures in recent years. The unemployment rate saw a slight increase to 4.3%, while a more comprehensive measure of unemployment – encompassing discouraged workers and part-time employees due to economic reasons – escalated to 8.1%. This is the highest level since October 2021.
Healthcare was at the forefront of job creation, boasting 31,000 new positions. Conversely, manufacturing and wholesale trade both experienced a loss, shedding 12,000 jobs each.
The underwhelming data strengthens the belief that the Federal Reserve will introduce interest rate cuts in its September meeting. The softening labor market has become a significant worry for policymakers, especially in the face of challenges posed by persistent inflation and global trade uncertainties.
The weak jobs report is also set against a backdrop of wider economic headwinds, including apprehensions about corporate earnings growth and inflated stock market valuations. Investors are keeping a close eye on employment trends as a crucial indicator of economic resilience and the direction of Fed policy.
Source: CNBC