U.S. job growth increased less than expected in August, while the unemployment rate dropped by 0.1 percentage point, shedding little light on whether or to what extent the Federal Reserve will cut interest rates this month.
Nonfarm payrolls increased by 142,000 jobs in August, falling short of the 160,000 forecasted by economists, Reuters reported. Job gains in June and July were also lower than initially estimated, with the Labor Department revising down June’s job growth by 61,000 and July’s figure by 25,000. The revised July figure marked the lowest nonfarm payrolls reading since December 2020.
The latest report gives little clarity regarding whether the Federal Reserve will move forward with an interest rate reduction expected this month. The central bank has raised rates to the highest level in 23 years as it seeks to bring down inflation under the Biden-Harris administration.
"Rarely has there been such a make or break number—unfortunately, today’s jobs report doesn’t entirely resolve the recession debate," said Seema Shah, chief global strategist at Principal Asset Management.
"A softer-than-expected jobs report may support those in favor of a 0.5% rate cut on September 18, but the jury is likely still out," said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.