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Job Growth Disappoints, but Unemployment Ticks Down in August Jobs Report
September 6, 2024
The U.S. economy added fewer jobs than expected in August as the labor market continues to cool, further clearing the way for the Federal Reserve to begin cutting interest rates later this month.
The nation’s employers added 142,000 jobs last month, according to the Labor Department’s Bureau of Labor Statistics. That is up from the downwardly revised 89,000 in July, but below expectations of 161,000 from economists polled by Dow Jones.
At the same time, the unemployment rate ticked down to 4.2%, as economists had expected. The labor force expanded by 120,000 for the month, and the workforce participation rate, which tracks the portion of the working-age population that is either employed or actively seeking work, held steady at 62.7%. An alternate measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged higher to 7.9%, the highest reading since October 2021.
The report comes as the markets are split on what the Fed’s next steps will be concerning interest rates. Policymakers have held rates steady since July 2023 after sharply increasing them to the highest level in more than 20 years.
The markets are pricing a 100% probability of a rate cut when the Fed meets next week, but are split on the size of the cut. A larger 50 basis point cut could help boost a slowing economy, but also risks reigniting inflationary pressures. On the other hand, a smaller 25 basis point cut could increase the likelihood that we see a recession.
