The U.S. economy added a bigger-than-expected number of new jobs last month, data indicated Friday, but the headline unemployment rate leapt to the highest in more than a year and wage growth slowed, suggesting a cooling labor market over the coming months.
The Labor Department's Bureau of Labor Statistics said 187,000 new jobs were created last month, firmly ahead of the Wall Street consensus forecast of a 170,000 gain, which was the weakest monthly increase since December 2020.
Private-payroll gains were pegged at 179,000, the BLS said, topping analysts' estimates of a 150,000, although the unemployment rate jumped to 3.8%.
The BLS also revised its July jobs-addition estimate lower, to 157,000 from its original estimate of a 187,000 net gain. It cut its June estimate to 105,000 from its prior estimate of 185,000.
The BLS noted that hourly wages were up 0.3% on the month -- compared with the 0.4% gain recorded in July and Wall Street's consensus forecast. On an annual basis, wages were up 4.3%, against Wall Street's 4.4% forecast.
"The US jobs market has continued its hot streak ... however, it is clear that the pace of labor market growth is beginning to slow, and with previous months’ reports being revised down and the unemployment rate ticking up to its highest level in over 18 months, it is perhaps indicative that we are at or near the end of the rate hiking cycle," said Richard Carter, head of fixed interest research at Quilter Cheviot.
"The Fed won’t want to overcorrect, and with its next meeting around the corner, and the data remaining stable for now, we can see it hitting the pause button and moving into a holding pattern," he added.
U.S. stocks were higher following the data release, with the Dow Jones Industrial Average rising 71 points in late morning trading Friday and the S&P 500 booking a 15 point advance. The tech-focused Nasdaq was up 2 points.
Benchmark 10-year Treasury note yields fell 4 basis points from overnight levels to 4.069% following the BLS release, but reversed that decline to trade at 4.185%, while 2-year notes fell to 4.881%.
The CME Group's FedWatch now indicates a 93% chance that the Fed holds its benchmark lending rate at between 5.25% and 5.5% later this month in Washington, with the odds of a November hike pegged at 38.3%, down from has high as 50% at the start of the week.
Earlier this week, payroll-processing group ADP said in its National Employment Report that private-sector jobs grew 177,000 last month down from the upwardly-revised tally of 371,000 in July and the smallest increase since March.
Wages for job-stayers were up 5.9% from last year, the ADP report noted, with a 9.5% increase for those seeking a new role, the slowest in two years.
In a separate report on Tuesday, the BLS also noted that around 8.83 million positions went unfilled over the month of July, down from the 9.582 million recorded in June and extending a run of monthly declines that began in March.
The July figure, taken from the BLS's Job Openings and Labor Turnover Survey, known as Jolts, was the lowest since March of 2021 and down from the all-time high of 12.027 million recorded in March of last year.
The so-called quits rate, which tracks workers leaving their jobs voluntarily — often for pay increases in another position — slipped to 2.3% in July from 2.4% in June and the 3% peak it hit at the start of last year.
