The US economy added fewer jobs than expected in August while the unemployment rate fell.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 142,000 nonfarm jobs in August, lower than the 165,000 economists had expected.
Meanwhile, the unemployment rate dropped to 4.2%, from 4.3% in July. August job gains were higher than the revised 89,000 for July. Additionally, revisions to the June and July jobs report showed the US economy added 86,000 fewer jobs than originally reported in those months.
Wage growth, a key measure for assessing inflationary pressures, rose to 3.8% year-on-year, up from an annual increase of 3.6% in July. On a monthly basis, wages rose 0.4%, higher than the 0.2% seen in the previous month.
Also in Friday's report, the labor force participation rate remained steady from the previous month at 62.7%.
At the heart of this report is the debate over how far the Federal Reserve should cut interest rates at its meeting later this month. In a speech in late August, Federal Reserve Chairman Jerome Powell said the cooling in the labor market was "clear" and added that the central bank was not "looking for or welcoming more cooling in labor market conditions."
Signs of further cooling in the labor market were seen earlier this week. The ADP National Employment Report for August showed the US private sector added 99,000 jobs in the month, well below economists' estimate of 145,000 and less than the 122,000 jobs added in July. August data marked the fifth consecutive month of slower job gains from the previous month. Meanwhile, data released on Wednesday showed the number of job openings in the US labor market in July was the lowest since January 2021.
The data led markets to predict a 43% chance that the Federal Reserve will cut interest rates by 50 basis points at the end of its September meeting, according to CME's FedWatch Tool.
