U.S. Treasury Secretary Janet Yellen kept an optimistic outlook on the labor market, stating that it is at a "healthy" state. Yellen's statement came as the recent data showed that the U.S. job market was weakening.
The unemployment rate in July increased up to 4.3% from a 4.1% in June. The data was touted to have been contributory to the market sell-off, which occurred at the early weeks of August. For Yellen, a former Fed chair, the rate was still low, Business Insider noted.
"The job market has become less tight within the last year or so, but the unemployment rate we have today by historical standards would be considered very low," Yellen told reporters in Raleigh, North Carolina on Thursday, as mentioned in Bloomberg.
"My judgment is that we have a good, healthy labor market where we continue to create jobs," Yellen added.
The report for August jobs is scheduled to be released on Friday morning and is expected to indicate a slight drop of 0.1% in the unemployment rate.
Investors look at job report to gauge the health of the labor market, especially when recent data indicate that conditions are softening. According to the Labor Department, there were 7.7 million job vacancies in July, a decrease from 7.9 million in June. This marks the lowest level since January 2021, signaling a possible employment downturn amid increasing layoffs.
Data from private payroll companies showed that it missed its target 140,000 hires. In August, employers hired only 99,000, down by 11,000 compared to the 110,000 hires in July.
The release also noted that the total separations in July increased to 5.4 million and that the total separations rate was little changed at 3.4%. In July, the number and rate of layoffs and discharges changed little at 1.8 million and 1.1%, respectively.
Later this month, the Fed is expected to cut interest rates and the quantum of cut would still be based on the performance of the labor market. A 25 basis-point cut is expected but there is also a possibility of a 50-basis point cut.
