WASHINGTON–Newly released jobs numbers make it increasingly likely the Federal Reserve will cut rates by as much as half a point when it meets later this month.
The Labor Department reported the economy added 142,000 jobs in August, up slightly from July’s increase, which helped to reassure markets that the slowdown is moderate.
The unemployment rate in August ticked lower to 4.2%.
"The August jobs report showed continued weakening in employment growth, despite slight improvement for the month,” said America’s Credit Unions Chief Economist Dawit Kebede. “Revised June and July numbers were reduced by 86,000, bringing the average job gains over the last three months to 116,000. The BLS announced in late August a preliminary benchmark revision, showing employment through March 2024 is 800,000 lower than previously reported. The Federal Reserve is now weighing the employment risks of tight monetary policy, increasing the likelihood of a half-point rate cut in September."
The Labor Department revised down its estimates for June and July job growth by a combined 86,000 jobs.
NY Fed President Responds
According to the Wall Street Journal, in a speech that started shortly after the jobs numbers came out, New York Fed President John Williams echoed the recent message of other Fed officials, that rate cuts are coming soon.
“The data today is consistent with what we’ve been seeing—a slowing economy, a cooling off in the labor market,” said Williams.
Williams said the Fed could now focus on lowering rates “over time” to a setting that neither stimulates nor restrains the economy, the Journal reported.
August’s job gains were led by hiring in construction and healthcare. The labor-force participation rate held steady. Year-over-year wage gains ticked upward to 3.8%.