Summary:
- US Labor statistics beat market expectations in some cases and missed them in others.
- US unemployment rate increased to 3.7%.
US Labor Market data
After a surge of statistics that indicate a strong consumer and high labor demand, the eagerly awaited US jobs report could tip the scales toward a third jumbo-sized boost in interest rates later this month. One of the last significant reports that Fed policymakers will have access to before the mid-September policy meeting will help them solve a challenging economic and inflationary riddle.
According to projections, August payroll growth will be solid but moderate at 298,000, and the unemployment rate will remain unchanged at 3.5%, matching the lowest level in fifty years. In addition, strong pay growth is anticipated despite the ongoing labor market imbalance between supply and demand.
These numbers, along with a wildly positive employment report for July, rising consumer sentiment measurements, and an unexpected increase in job vacancies, may be enough to persuade the Fed to extend the highest interest-rate increases in a generation in order to rein in inflation.
According to all of those statistics, Anna Wong, chief US economist at Bloomberg Economics, said that this report "becomes very important." The pattern that other indicators have been showing—that the economy is quite resilient—might be a "stamp of confirmation" by all this.
The Labor Department's average hourly earnings statistics and any signal of significantly slower employment growth in Friday's report, when combined with a larger slowdown in those figures, might alter expectations in favor of a half-point rate hike. However, before deciding on the best course of action, Fed officials will need to observe the results of the consumer price index later this month.
The wage measurements will be a significant part of the jobs report. According to economists, the data will indicate a 5.3% increase from August 2021 and a 0.4% increase from one month prior in average hourly wages. In comparison to the preceding two months, the yearly growth would indicate a little acceleration.
Although it is not usually the case, Claudia Sahm, founder of Stay-At-Home Macro (SAHM) Consulting and a former Fed economist, said a slowdown in wage growth could provide Fed officials some comfort by pointing to an easing of inflationary pressures.
Actual US Labor Statistics - unemployment rose to 3.7%
The actual labor data exceeded expectations in some cases, with the unemployment rate coming in at 3.7%, exceeding the market expectation of 3.5%. Whereas the average hourly earnings statistic came in at 5.2%, missing the market's expectation of 5.3%. US payroll growth exceeded expectations in both Nonfarm payroll coming in at 315K and Private nonfarm payroll at 308K, both of which were expected to be 300K. Average hourly earnings slightly missed expectations of 0.4% and came in at 0.3%.
Sources: bloomberg.com, investing.com
