U.S. employers added jobs at a healthy, yet more moderate pace in August, offering little evidence of any kind of definitive slowdown despite a jump in unemployment.
Nonfarm payrolls increased 315,000 last month following a revised 526,000 advance in July, a Labor Department report showed Friday. The unemployment rate unexpectedly rose to 3.7% as the participation rate climbed.
Economists projected an almost 300,000 gain in payrolls and a 3.5% jobless rate, based on the median estimates in a Bloomberg survey.
Despite moderating job growth, the still-solid employment gain points to a healthy appetite for labor amid high inflation, rising interest rates and an uncertain economic outlook. Such demand, along with repeated pay raises, continues to underpin consumer spending, making the Federal Reserve’s task of slowing down the economy to tame the worst inflation in decades even more difficult.
The report, against a backdrop of other data showing improving consumer sentiment and a surprise pickup in job openings, may still nudge the Fed toward its third-straight jumbo-sized rate hike later this month. However, fresh consumer price data in less than two weeks will play a large role in determining the appropriate response for policy makers.
Short-term Treasury yields fell, while S&P 500 index futures rose and the dollar extended losses on the day. Investors slightly pared bets that the Fed will raise interest rates by 75 basis points at its meeting later this month, though traders continued to see that as the most likely outcome, with about a 60% probability priced in.
