US Nonfarm Payrolls Increases 315,000 In August, Solid Job Growth Registered

The US nonfarm payrolls increased 315,000 in August, the Labor Department said, beating the expectations marginally. Also, data for July has been revised to show payrolls surging at 5,26,000 instead of 5,28,000 as previously reported. However, the unemployment rate increased to 3.7% from 3.5% in July, while average hourly earnings increased 0.3%, gaining 5.2% YoY. But, the average work week falls to 34.5 hours from 34.6 hours. Additionally, only a moderate wage growth has been registered.

Investors and analysts were waiting for this US employment data to be published after US Federal Reserve Chair Jerome Powell sounded quite hawkish against inflation at the Jackson Hole Symposium last week. Fed Chair stated that the central bank can raise its rate by 75 bps in September, at the monetary policy committee meeting, but they will track the economic-growth related data on that ground. The Fed is trying to restrict inflation to 2%.

Fed Chair Jerome Powell also commented, "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses."

"Solid job growth last month was further evidence that the economy continues 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 the front loading of rate hikes. Despite rising recession risks, the labor market continues to chart its own path. August consumer price data due mid-month will also be a major factor in determining the size of the next rate increase," Reuters reports today.

"There is also pent-up demand for workers in service industries like restaurants and airlines, which are among the sectors hardest hit by the pandemic. The labor force participation rate or the proportion of working-age Americans who have a job or are looking for one remains more than a full percentage point below its pre-pandemic level," Reuters added.