A slowdown in the U.S. job market gives the Fed room to hold off rate hikes at this month’s Federal Open Market Committee (FOMC) meeting.
The Bureau of Labor Statistics announced on the 1st that non-farm payrolls (business establishment survey, seasonally adjusted) increased by 187,000 in August from the previous month. Employment figures for June and July were revised down significantly. The unemployment rate rose to 3.8% in August, according to household surveys. It partly reflected the rising labor force participation rate. Average hourly earnings rose by 0.2% from the previous month, the slowest increase since February 2022.
U.S. Employment Report for August Increases by 187,000 – Wages Slowdown, Unemployment Rate Rise to 3.8% (3)
“The labor market continues to heat up over time, exactly the way the Fed wants it,” said Derek Tan, economist at LH Meyer/Monetary Policy Analytics. “Historical figures have been revised downwards, wage growth has been somewhat modest and the labor force participation rate is still rising. It happened,” he said.
Acting U.S. Labor Secretary Sue on Bloomberg Television on August jobs report
Source: Bloomberg
Federal Reserve Chairman Jerome Powell said in a speech last week at the Jackson Hole meeting, the Kansas City Fed’s annual symposium, that inflation was still too high and was ready to raise interest rates further if necessary. pointed out there is. At its July meeting, the FOMC raised its federal funds rate target to 5.25% to 5.5%, the highest level in 22 years. The latest FOMC forecasts suggest another rate hike later this year.
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Investors are increasingly doubtful that another rate hike will take place. Futures traders expect rates to stay on hold at the September 19-20 meeting, with a less than 50% chance of a November rate hike.
Fed officials are likely to welcome today’s news that more people are returning to the labor market. Such moves could help ease wage pressures. The overall labor force participation rate (the ratio of the working-age population, which is the sum of workers and job seekers, to the working-age population) was 62.8%, the highest level since February 2020. It was the first month-on-month increase since March.
“The Fed is looking at the supply-side reaction. But he said, “I would still maintain the threat that another rate hike is possible.”
Cleveland Fed President Mester said after Wednesday’s jobs report that the labor market was becoming more balanced, helped by the Fed’s actions, but that employment remained strong. “The policy decisions going forward will be a matter of risk management and how to manage the different costs of excessive and insufficient monetary policy tightening,” he said.
Cleveland Fed President Says Inflation ‘Too High’, Labor Market Equilibrium Is Improving
news-rsf-original-reference paywall">Original title:Cooling US Job Market Gives Fed Room to Pause Tightening for Now(excerpt)
2023-09-01 19:20:00
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