WASHINGTON – US job growth accelerated sharply in August while the unemployment rate held steady at 4.1 per cent, pointing to a still stable labour market and keeping an interest rate hike from the Federal Reserve in September on the table.
Non-farm payrolls surged by 162,000 jobs in August after an upwardly revised rise of 21,000 in July, the Labor Department’s Bureau of Labor Statistics said in its closely watched employment report on Sept 4.
Economists polled by Reuters had forecast payrolls would increase by 56,000 after a previously reported drop of 23,000 in July.
Estimates ranged from as low as a loss of 25,000 jobs to as high as a gain of 121,000.
Wage growth continued to cool in August, with average hourly earnings rising 3.1 per cent compared to a year earlier. That was the slowest pace since the depths of the pandemic and lower than the inflation rate.
Despite signs in the spring that hiring was gaining momentum, there were concerns that the labour market was reverting to a ho-hum state. Job openings and the rate of hiring have stalled, even as layoffs remain exceedingly low.
The latest report, however, is an encouraging sign that the fragile labour market may be on sturdier footing.
Ahead of the employment report, financial markets dialled back rate hike expectations after Fed Governor Christopher Waller said on Sept 3 that he was inclined to argue in favour of keeping rates steady in September if upcoming data confirmed inflation pressures were cooling off.
Financial markets saw a roughly 52 per cent chance of a rate hike at the Fed’s September 15 to 16 meeting, down from 63.2 per cent on Sept 2, according to CME’s FedWatch tool.
Concerns about inflation and lack of forward guidance from the Fed have helped to boost US Treasury yields, which economists see as a problem for the central bank.
Rising yields drove the 30-year fixed mortgage rate to more than a one-year high of 6.71 per cent this week, data from mortgage finance agency Freddie Mac showed on Thursday, which could further undermine a struggling housing market. REUTERS
