Economy

Employers added 142,000 jobs in August, fewer than economists had expected, and previous months were revised downward.The labor market appears to be treading water, with employers’ desire to hire staying just ahead of the supply of workers looking for jobs.That’s the picture that emerges from the August jobs report, released on Friday, which offered evidence that while softer than it has been in years, the landscape for employment remains healthy, with wages still growing and Americans still eager to work.“This report does not indicate that we’re taking another step toward a recession, but we’re still seeing further signs of cooling,” said Sam Kuhn, an economist with the recruitment software company Appcast. “We’re trending more closely to a 2019 labor market, than the labor market in 2010 or 2011.”Employers added 142,000 positions last month, the Labor Department reported. That was somewhat fewer than forecast, bringing the three-month average to 116,000 jobs after the two prior summer months were revised down significantly. Over the year before June, the monthly average was 220,000, although that number is expected to shrink when annual revisions are finalized next year.The unemployment rate edged down to 4.2 percent, alleviating concerns that it was on a steep upward trajectory after July’s jump to 4.3 percent, which appears to have been driven by weather-related temporary layoffs.In other signs of stability, the average workweek ticked up to 34.3 hours and wages grew 0.4 percent over the month, slightly more than economists had expected but not enough to add significant fuel to inflation.Wages Are Outpacing InflationYear-over-year percentage change in earnings vs. inflation More

The unemployment rate for Black workers fell to 6.1% in August from 6.3% in July.
The jobless rate slipped for both Black men and Hispanic women.
The labor force participation rate held steady for white workers but decreased for Black and Asian workers.

An attendee takes information about a California State job at a City Career Fair hiring event in Sacramento, California, on June 5, 2024.
David Paul Morris | Bloomberg | Getty Images

The unemployment rate for Black workers fell in August, according to data released Friday by the Department of Labor.
In August, Black workers saw their jobless rate fall to 6.1% from 6.3% in the month prior. This trend was in line with the overall unemployment rate for the country, which ticked down to 4.2% in August from July.

On the other hand, unemployment for white workers held steady at 3.8%. The jobless rate also rose for Asian and Hispanic workers. For the former, it increased to 4.1% from 3.7%. For the latter, it crept higher to 5.5% from 5.3%.
Black men experienced a big month-to-month drop in unemployment, with their jobless rates falling to 5.9% from 6.6%. On the other hand, the unemployment rate held steady at 5.5% for Black women.

While Hispanic women saw their jobless rate fall to 5% from 5.4%, unemployment rates for their male counterparts climbed to 4.8% from 4.4%. The unemployment rate for white men also ticked higher to 3.6% from 3.5%, while it was unchanged at 3.4% for white women.
Diving into the employment-to-population ratio for female prime-age workers, or those ages 25 to 54, paints a very optimistic view of the labor market, according to Elise Gould, senior economist at the Economic Policy Institute.
“The employment-to-population ratio for women’s prime-age workers remains at a quarter-century high,” she told CNBC. “This remains very strong, even if there is still a little bit of softening in other measures.”

“It makes sense we’ll see some weakness now that we’re approaching full employment,” Gould added.
Last month, the labor force participation rate — the percentage of the population that is either employed or actively seeking work — remained unchanged at 62.7%.

Among white workers, the rate steadied, while it fell to 62.7% from 63.2% for Black workers. Within Asian workers, the participation slipped to 65.4% from 65.7%, and rose among Hispanic workers to 67.8% from 67.3%.
— CNBC’s Gabriel Cortes contributed to this report.
Correction: The unemployment rate for Black women held steady at 5.5%. A previous version misstated the percentage.

Don’t miss these insights from CNBC PRO More

“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Fed Governor Christopher Waller said.
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to belief that the pace of hiring is weakening.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, DC, US, on Friday, March 22, 2024. A trio of central bank decisions this week sent a clear message to markets that officials are preparing to loosen monetary policy, reigniting investor appetite for risk.
Bloomberg | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller on Friday backed an interest rate cut at the upcoming central bank policy meeting in less than two weeks, and indicated he’d be open to a substantial reduction if necessary.
“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Waller said in remarks prepared for the Council on Foreign Relations in New York.

Other policymakers recently have advocated easing policy soon, but this is one of the clearest indications it will happen at the Sept. 17-18 Federal Open Market Committee meeting. Waller repeated verbiage that Fed Chair Jerome Powell used in late August — that the “time has come” for adjustments to monetary policy.
“Determining the pace of rate cuts and ultimately the total reduction in the policy rate are decisions that lie in the future,” Waller added. He noted that he is “open-minded about the size and pace of cuts” and said, “If the data suggests the need for larger cuts, then I will support that as well.”
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to the belief that the pace of hiring is weakening. The Labor Department reported job growth of 142,000, higher than July but still below the 161,000 Dow Jones forecast.
Waller did not specify how much he thinks the Fed should cut or how frequently. But he said he is open to the possibility that it may need to be aggressive in keeping the labor market afloat as inflation moderates toward the central bank’s 2% goal.
He noted that if the labor market deteriorates more quickly than expected, the Fed should react with larger cuts, which he said would lead to “a greater likelihood of achieving a soft landing.”

“Furthermore, I do not expect this first cut to be the last. With inflation and employment near our longer-run goals and the labor market moderating, it is likely that a series of reductions will be appropriate,” he said.
Futures market pricing following the jobs report tilted toward a greater likelihood of a quarter percentage point rate reduction this month. But it also indicated more aggressive moves later in the year, with a half-point move in November and possibly another in December, according to the CME Group’s FedWatch measure.

Don’t miss these insights from CNBC PRO More

The August jobs report came in weaker than expected.
Employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance.

Getty Images

The August jobs report came in weaker than expected, and employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance, with each category adding more than 40,000 jobs, according to data from the Bureau of Labor Statistics.

If private education is included with the health-care group, as some economists do, that category would have grown by 47,000 jobs.
Elsewhere in the report, related categories of jobs saw conflicting data. Construction was a bright spot, growing by 34,000 jobs, but manufacturing shed 24,000 jobs. Professional and business services ticked up by 8,000 jobs, but information lost 7,000.
“The job growth is coming really from only three places right now: leisure and hospitality, health and education services, and government. … We’re just not seeing a lot of growth in business and professional services, and I think that is indicative of an economy that’s slowing down,” former Department of Labor chief economist Betsey Stevenson said on CNBC’s “Squawk Box.”
Even some of the stronger categories showed a slowdown, at least temporarily. The health-care subsector added 31,000 jobs, or about half its average over the prior 12 months, according to the Bureau of Labor Statistics.

Don’t miss these insights from CNBC PRO More

Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls increasing by 160,000 jobs after a previously reported 114,000 gain in July. Estimates ranged from 100,000 to 245,000 jobs.Markets expectations for an upsized 50 basis point cut at the Federal Reserve’s mid-September meeting increased after the data. MARKET REACTION:STOCKS: S&P 500 E-minis erased early losses were up 5.25 points, or 0.1%.BONDS: he yield on benchmark U.S. 10-year notes edged down 0.4 basis point to 3.729%, the two-year note yield declined 4.4 basis points to 3.7082%.FOREX: The dollar index slipped 0.02% at 101.02.COMMENTS: GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK“I think the market’s really struggling with this one because it’s really in the middle of what could be used as a justification for either a 25 or 50 basis point rate cut.””It is consistent with a cut in September. The big question right now is just what’s the size? I think that’s what the markets are struggling with right now. Is this number weak enough for a 50 basis point rate cut in September? If you ascribe a more activist role to the Fed, then yes. If you think they are looking to be a little bit more measured, then no. But either way, I think the markets are going to be really balanced on a knife’s edge until the Fed shows support for either a 25 or a 50 one way or the other, and it’s really a tough decision.“If you look at the payroll report net of revisions, it’s not great, especially net of the 86K revisions we saw for the last two months. So I do think that the unemployment rate is the key, but it’s not indicative of a very strong labor market. We do see the labor market really not just coming into balance, but really starting to cool off quite significantly, which could make the Fed quite nervous.”LOU BASENESE, PRESIDENT AND CHIEF MARKET STRATEGIST, MDB CAPITAL, NEW YORK“Everything is going down. You saw the lower-than-expected adds, you saw the last two months revised down, which means rates have to go down. Powell has got no choice. What is to be determined is if he timed it perfectly with rate cuts or if he was too late. I think so far, he’s OK. You don’t see massive layoffs yet. But if we start seeing layoffs in the next month or two, it’s going to suggest his timing was too late. “Stocks are going to go down until next week when the Fed makes it definitive that they’re cutting, which could put pressure on them to do 50 basis points versus 25. I think 25 is all but guaranteed. But downwards stocks pressure heading into the meeting could change it to a 50-basis point cut.”DREW MATUS, CHIEF MARKET STRATEGIST, METLIFE INVESTMENT MANAGEMENT, NEW JERSEY“The payroll report suggests there is no reason for the Federal Reserve to rush. Payroll growth was OK, unemployment was effectively unchanged and hours worked increased, boosting weekly take home pay for workers. The labor market is slowing, but at a slow pace, allowing the Fed to move more deliberately in September. We continue to expect 75 basis points of easing this year as the Fed calibrates policy to manage the ongoing economic slowdown.”BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN”I love all animals, so I mean this with all respect, but there was a dead cat bounce in August from the July softness. There were large back-month revisions. There was a large increase in part-time employment. There was a decrease in temporary help services again. The diffusion index for manufacturing fell. The headline number of 142,000 would ordinarily be considered healthy, but this labor market is held together by duct tape and string. “Could the Fed cut by 50 bps? Yes, but will they? No. They probably want to start with 25 and retain the option to increase that to 50 rather than just jump right into a 50.”ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT“Market is trying to digest the news just as much as anybody else. The initial pop in futures was based on the unemployment rate being pretty much right in line with expectations and down from the prior report, but when they get into the numbers, like the non-farm payroll itself, it shows that decline in the number of jobs being created versus expectations. And then the prior revisions lower, which is really sort of speaking to the economy slowing down.”I don’t think it’s an indication that the economy is collapsing by any means, but it is an indication that it’s slowing. This means a 25-basis-point rate cut. I don’t think it speaks to needing anything more than that right yet.”Those that might have been kind of hoping for a 50bps rate cut maybe disappointed, but they have to know that they better be careful what they wish for.”KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO    “The U.S. economy looks more likely to gouge the runway in the months ahead, justifying an increasingly aggressive response from officials at the Federal Reserve.    “A half-point rate cut at the central bank’s September meeting remains unlikely, but today’s release provided clear evidence of a sharp deterioration in labor market fundamentals, and will bolster bets on at least one jumbo-sized rate cut in the coming months.    “The dollar is retreating, yields are coming down across the front end of the curve, and rate-sensitive asset classes are adding to recent gains.”MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON “The August US labour market report painted something of a mixed picture of the employment situation… all of this does little to clear-up the debate over the September Fed meeting.””Doves will point to a cooling pace of headline payrolls growth as potential reasoning for a larger 50bp cut. Hawks, meanwhile, will reasonably point towards the lack of further cooling compared to the July report, and hot-ish earnings growth, as reasons to kick-off the normalization cycle with a more modest 25bp move. My base case remains for the latter, particularly given the risk the Fed run of sparking a market panic were a larger cut to be delivered.” MATT ROWE, HEAD OF PORTFOLIO MANAGEMENT, CROSS ASSET STRATEGIES AT NOMURA CAPITAL MANAGEMENT, NEW YORK, NY    “The numbers came in at an ideal spot for what the market was hoping for. The unemployment rate remained relatively low coming in at 4.2%. It’s not showing some kind of catastrophe break down in the labor market. Also the hourly rate was not cut back. One thing that people were focused on was to see if from an employer standpoint if hours were being cut back and that doesn’t appear to be the case.”    “Today’s numbers don’t look like a recession is imminent. It just looks like things are slowing down a bit, not like something cataclysmic is imminent.    “The market’s going to love this. Today, I think we’ll see the market rally on the open. What the market’s going to get out of this is clear cover for the Fed to be cutting rates and a path to cutting rates more than once … I would be surprised if we don’t finish the day in the green.” More

The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labor market while also clearing the way for the Federal Reserve to lower interest rates later this month.
Nonfarm payrolls expanded by 142,000 during the month, up from 89,000 in July and below the 161,000 consensus forecast from Dow Jones, according to a report Friday from the Labor Department’s Bureau of Labor Statistics.

At the same time, the unemployment rate ticked down to 4.2%, as expected.
The labor force expanded by 120,000 for the month, helping push the jobless level down by 0.1 percentage point, though the labor force participation rate held at 62.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021.
The household survey, which is used to calculate the unemployment rate and is often more volatile than the survey of establishments, showed employment growth of 168,000.The balance, though, tilted towards part-time employment, which increased by 527,000, while full-time fell by 438,000.

Markets showed little initial reaction to the data, with stock futures holding negative and Treasury yields also lower.
While the August numbers were close to expectations, the previous two months saw substantial downward revisions. The BLS cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000.

“I don’t like this a whole lot. It’s not disaster, but it’s below expectations on the headline, and what really bothers me is the revisions,” said Dan North, senior economist for North America at Allianz Trade. “This is certainly going the wrong way.”
From a sector standpoint, construction led with 34,000 additional jobs. Other substantial gainers included health care, with 31,000, and social assistance, which saw growth of 13,000. Manufacturing lost 24,000 on the month.
On wages, average hourly earnings increased by 0.4% on the month and 3.8% from a year ago, both higher than the respective estimates for 0.3% and 3.7%. Hours worked edged higher to 34.3.

The report comes with markets on edge over the next step for the Fed, which has been on hold with rates since July 2023 after having enacted a series of sharp increases to bring down inflation.
Heading into the release, markets had been pricing in a 100% probability that the Fed will start cutting rates when it meets Sept. 17-18. The only question was how much.
Following the payrolls release, futures market pricing tilted towards a half percentage point cut, according to the CME Group’s FedWatch gauge.
“For the Fed, the decision comes down to deciding which is the bigger risk: reigniting inflation pressures if they cut by 50 [basis points] or threatening recession if they only cut by 25 [basis points],” said Seema Shah, chief global strategist at Principal Asset Management. “On balance, with inflation pressures subdued, there is no reason for the Fed not to err on the side of caution and frontload rate cuts.”
The recent narrative for the economic data has indicated continuing growth but a slowdown for the labor market. Payrolls processing firm ADP reported Thursday that private companies added just 99,000 jobs in August, while outplacement firm Challenger, Gray & Christmas reported that layoffs surged in August and hiring had hit its slowest year-to-date pace going back to at least 2005.
The BLS report indicated that the private sector added 118,000 jobs for the month, up from 74,000 in July. Government jobs increased by 24,000.
Most Fed officials have indicated that they also see rates coming down. In his pivotal annual speech at the Fed’s Jackson Hole, Wyoming conclave, Chair Jerome Powell proclaimed that “the time has come” to adjust policy, though he provided no specifics for what that meant.
In a speech Friday morning, New York Fed President John Williams endorsed rate cuts.
“With the economy now in equipoise and inflation on a path to 2 percent, it is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” Williams said in remarks before the Council on Foreign Relations in New York.
This is breaking news. Please check back for updates. More

WASHINGTON (Reuters) – The Federal Reserve said on Thursday it was seeking feedback on how it operates its “discount window,” which is intended to provide emergency lending to banks in times of stress.The Fed said it wanted comments on various aspects of how banks deal with the window, including the collection of legal documentation, pledging and withdrawing collateral, and extending credit. The central bank said the input will inform its efforts to keep the tool “effective and efficient.”The solicitation marks the latest effort by the Fed to tweak the discount window, which banks have long resisted utilizing out of concern that it carries a stigma that could undermine stability in times of stress.The Fed’s inquiry does not include any suggested changes, but central bank officials and other regulators have discussed making changes to the discount window to improve its utility, such as requiring banks to place cash or other assets with the Fed as collateral in case emergency borrowing is needed in the future. The Fed is giving the public 90 days to provide feedback.Fed data released in April found that less than half of U.S. banks had established borrowing capacity via pledged collateral at the discount window, despite persistent calls from regulators that it can be a helpful tool to navigate stressful periods. More

The economy added a net 22,100 jobs in August, fully driven by part-time employment, Statistics Canada said.Analysts polled by Reuters had forecast a jobless rate of 6.5% and net job additions of 25,000 in August.The Canadian dollar strengthened to C$1.3467 to the U.S. dollar, or 74.26 U.S. cents, up 0.3% on the day.Canada’s economy had been losing steam under the pressure of high interest rates, and most of the growth seen earlier in the year was primarily led by increase in population. But as GDP growth has lagged population growth, unemployment has crawled up, stoking fears of a recession. Canada’s unemployment rate has risen by 1.6 percentage points since January 2023, which some economists have called alarming and pressed for deeper rate cuts to prop up growth.The rise in unemployment was largest amongst the youth aged 15 to 24 on a year over year basis and the rate of joblessness this summer amongst them was highest in eight years.The Bank of Canada this week trimmed its key policy rate by 25 basis points to 4.25%, its third such move in a row and Governor Tiff Macklem said that deeper rate cuts could be implemented if the economy needed support.Slow employment growth was one of the reasons that could temper robust GDP growth projections for the third quarter, he said during his remarks.Financial markets trimmed their expectations of a rate cut in October to 93% from 98% before Friday’s announcement. Traders are fully pricing in two 25 basis point rates cut by December.The employment rate, or the number of people with jobs out of the total working age population of 15 years and older, has been steadily falling and hit 60.8% in August, Statscan said. It has fallen in 10 out of the last 11 months.The average hourly wage growth of permanent employees slowed to an annual rate of 4.9% in August from 5.2% in July, the statistics agency said. The wage growth figure, which has been partly responsible for keeping inflation high, is closely watched by the BoC. More