By 
Washington — US employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labour market slowdown continued and probably did not warrant a big interest rate cut from the Federal Reserve later in September.
Nonfarm payrolls increased by 142,000 jobs in August after a downwardly revised 89,000 rise in July, the US labour department’s Bureau of Labour 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.
The smaller-than-expected increase in payrolls probably does not signal a deterioration in labour market conditions. August payrolls have a tendency to initially print weaker relative to the consensus estimate and recent trend before being revised higher later. Hiring typically picks up in the education sector, which is expected by the model that the government uses to strip out seasonal fluctuations from the data.
The start of the new school year, however, varies across the country, which can throw off the so-called seasonal factors. The initial August payrolls counts have been revised higher in 10 of the past 13 years. Layoffs remain at historic lows.
The drop in the unemployment rate followed four straight monthly increases, which had lifted it near a three-year high of 4.3% in July. Early on Friday, financial markets saw a roughly 43% probability of a half-point rate cut when the Fed announces its decision at the September 18 policy meeting, according to CME Group’s FedWatch Tool. The odds of a 25-basis point rate reduction were about 57%.
Average hourly earnings increased 0.4% in August after rising 0.2% in July. Wages increased 3.8% year on year after advancing 3.6% in July. Still-solid wage growth continues to underpin the economy through consumer spending.
Reuters
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