Job Creation Falls Short Of Expectations In August, Unemployment Rate Ticks Lower, Wage Growth Soars

Signs of a cooling U.S. labor market eased in the government's Friday August jobs report, tempering recession fears that had intensified in July and earlier this week.

In August, the U.S. economy added 142,000 nonfarm payrolls, signaling a sharp improvement from July’s downwardly revised 89,000.

The 142,000 increase in nonfarm payrolls fell short of the 160,000 consensus estimate tracked by TradingEconomics, highlighted weaker-than-expected job acceleration during the month.

Before the release of the August jobs report, traders priced in a 43% probability of a 50-basis-point interest rate cut by the Federal Reserve later this month.

August Employment Situation: Key Highlights

• July payrolls were downwardly revised by 25,000 from 114,000 to 89,000.
• June payrolls were also subject to a downward revision, from 179,000 to 118,000.
• The unemployment rate softened from 4.3% to 4.2% in August, matching expectations of a slight decline.
• The number of people on temporary layoff decreased by 190,000 to 872,000, mostly offsetting July's increase.
• The number of permanent job losers remained unchanged at 1.7 million.
• Labor force participation rate held steady at 62.7%.
• The construction sector added 34,000 jobs, exceeding the 12-month average of 19,000 jobs per month.
• Health care added 31,000 jobs, about half the prior 12-month average of 60,000.
• Manufacturing saw a loss of 24,000 jobs, primarily due to a decline of 25,000 jobs in durable goods industries.
• Wage growth showed some upward pressure. Average hourly earnings increased by 0.4% (14 cents) to $35.21 in August, surpassing predictions of 0.3%.
• On a year-over-year basis, average hourly earnings rose 3.8%, compared to 3.6% in July and above expectations of 3.7%.

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