Announced this morning, the economy added 22,000 jobs in August, less than expected and the previous month was revised slightly higher. Furthermore, the June month was revised lower to -13,000 jobs lost, the first negative month since December of 2020. In August, the Leisure and Hospitality industry and Private Education and Health Services industry were relatively strong, while the Durable Goods industry and Government jobs were relatively weak. The Unemployment Rate increased one tenth to 4.3% as expected and the Labor Force Participation Rate at 62.3% is one tenth higher than the previous month. Average Hourly Earnings increased 0.3% in August, as expected, and grew 3.7% on an annual basis. In addition, Average Weekly Hours were 34.2, which is the same as the revised figure from the previous month.
Overall, a weak report as the headline number was less than expected and just barely positive, coupled with a slight uptick in the unemployment rate. The revision to a negative jobs figure in June is startling given the string of positive job increases each month going back to just after the pandemic. Meanwhile, wages increased in the month, and the annual increase remains near the 50-year average. The labor market has weakened throughout the balance of the year.
Core inflation measures have moved slightly higher in recent weeks in part due to tariff impacts starting to feed through the supply chain. However, considering the labor market has weakened over that same period, the Federal Reserve appears inclined to evaluate reducing rates at their upcoming meeting. The balance between inflation and the labor market will need to be closely monitored by the Federal Reserve in the months ahead as they consider policy. How well the consumer holds up amidst this balance will be key for the economy as we work through this period.
In all, the yield on the 10-year US Treasury ticks lower following the report and equity futures are higher as we head into the market open.
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