The U.S. job market showed signs of moderation in August, with businesses adding fewer jobs than anticipated, but the unemployment rate declined slightly from the previous month.
According to the Labor Department, nonfarm payrolls grew by 142,000 jobs in August, falling short of the expectations of economists surveyed by Reuters.
However, the unemployment rate, which had been on the rise for four consecutive months, eased down to 4.2%.
This data indicates that the Federal Reserve may be poised to initiate a round of interest rate cuts later this month, aiming to manage inflation without significantly slowing down the labor market.
A chief economist mentioned to Reuters that the report reflects a “measured pace” of cooling in the labor market, suggesting that the Fed is likely to opt for a quarter-point interest rate reduction.
On Friday, financial markets responded by factoring in a roughly 60% likelihood of a quarter-point rate cut from the Fed, while placing about a 40% chance on a more significant half-point reduction.
The August employment report highlighted that job growth was primarily driven by the construction sector, followed by the healthcare industry.
Average hourly earnings saw a slightly higher increase in August compared to July, with steady wage growth continuing to support the economy by bolstering consumer spending, which constitutes over two-thirds of U.S. economic activity.
