US hiring rebounded in August but fell short of expectations, while the unemployment rate edged down slightly, according to government data released on Friday. According to the Department of Labor, the economy added an estimated 142,000 jobs last month, marking an increase from July's revised total of 89,000.
August's job growth was below the anticipated 165,000, as projected by Briefing.com. The unemployment rate dropped from 4.3% to 4.2%, which may help ease some of the concerns for policymakers.
The data reinforces the view of a cooling labor market, increasing speculation that the Federal Reserve may lower interest rates from their decades-high levels in the coming weeks. Analysts now expect the Fed might implement a smaller rate cut of 25 basis points rather than a more substantial 50 basis points.
President Joe Biden emphasized the importance of maintaining the gains made in job growth and inflation control. Brendan Boyle, the top Democrat on the House Budget Committee, also urged the Fed to lower interest rates to sustain progress on inflation.
Criticism came from Republican presidential candidate Donald Trump, who labeled the job numbers "terrible," and the Republican National Committee, which criticized the downward revisions of previous job growth data.
The Federal Reserve's decision on rate cuts could be influenced by how the labor market performs in the near future. Nationwide chief economist Kathy Bostjancic noted that recent downward revisions and the slowing pace of job growth indicate the labor market is losing momentum. While she doesn't expect a significant rate cut this month, she suggested that larger reductions could be possible in November and December.
Fed governor Christopher Waller indicated that it might be time to lower rates, though he remains "open-minded" about the size and pace of cuts, depending on upcoming data.
Average hourly earnings rose by 0.4% to $35.21 in August, surpassing expectations, with a 3.8% increase over the past year. ZipRecruiter chief economist Julia Pollak pointed out that while macroeconomic indicators are mixed, the labor market has shown consistent weakness over the past three months, with job growth outside of healthcare and social assistance slowing notably.
Economist Nancy Vanden Houten of Oxford Economics also expressed surprise at the sharp decline in manufacturing jobs relative to her forecast. However, she noted that while the unemployment rate has been a concern, it has not been accompanied by a significant rise in permanent job losses.
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