Announced this morning, the economy added 142,000 jobs in August, less than expected and the previous month was revised lower. The Leisure and Hospitality and Construction industries were relatively strong, while the Manufacturing industry was relatively weak. The Unemployment Rate fell one tenth to 4.2% and the Labor Force Participation Rate at 62.7% is the same as the previous month. Average Hourly Earnings increased 0.4% in August, slightly higher than expected, and grew 3.8% on an annual basis. In addition, Average Weekly Hours were 34.3, which is one tenth higher than the previous month.
Overall, still an increase in the headline jobs figure in August, although it was less than expected and the previous month’s weak figure was revised even lower. In addition, the unemployment rate ticked slightly lower following last month’s increase. The labor market may still be intact, but it is considerably softer than earlier this year. The strength in service industries, such as leisure / hospitality and construction, compared with relative weakness in manufacturing highlights the difference seen in the ISM services data released earlier this week.
Considering the Federal Reserve does not want to see further weakening in the labor market, per comments from their recent annual meeting, the data points this morning likely will not impact their decision to begin easing their policy. The speed and magnitude of that adjustment and its impact on consumers and interest rate sensitive parts of the economy will be closely watched in the coming weeks.
Following the release of the jobs report, the yield on the U.S. 10-year treasury initially ticks higher but is now little-changed and equity futures are mixed as we head into the market open.
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