The latest report showed U.S. employers hired fewer workers than expected in August, leading to indications that the Federal Reserve is on track to raise interest rates by 75 basis points for the third time this month, even as the unemployment rate rose to 3.7%.
NFP data rose by 315,000 jobs last month, the Labor Department reported in a closely watched jobs report on Friday. Data for July was revised down slightly to show payrolls rose 526,000 versus 528,000 as previously reported. This marks the 20th consecutive month of job growth.
Economists polled by Reuters had forecast payrolls rising by 300,000. Estimates range from as low as 75,000 to as high as 450,000. The unemployment rate rose to 3.7% from a pre-pandemic low of 3.5% in July.
The jobs report was released after Fed Chairman Jerome Powell warned Americans of a period of slow economic growth and possible rising unemployment as the US central bank aggressively tightens monetary policy to tame inflation.
Strong job growth last month was further evidence that the economy continued to expand even as gross domestic product contracted in the first half of the year and was another sign the Fed still needs to cool the labor market despite rising interest rates.
The Fed has twice raised its policy rate by three-quarters of a percentage point in June and July. Since March, it has raised that rate from near zero to its current range of 2.25% to 2.50%. Financial markets peg a roughly 70% probability of a 75 basis point hike at the Fed's policy meeting on September 20-21.
August consumer price data to be released in the middle of the month will also be a major factor in determining the size of the next rate hike.
Average hourly earnings rose 0.3% in August after rising 0.5% in July. That kept annual wage growth at 5.2% in August. The US dollar index eased by 0.47% to trade at 109.185 after the jobs data was released.
