August Jobs Report Comes In Worse Than Expected As Labor Market Stays Chilly

Posted by Admin September 6, 2024 Jobs

Topline

The teetering U.S. labor market grew by less than expected last month, according to a Friday release from the Labor Department, sending a chill through Wall Street as the threat of a recession lingers.

Last month’s non-farm payrolls report sent a chill through financial markets.

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Key Facts

The Labor Department said U.S. employers reported an increase of 142,000 nonfarm payrolls in August, up from July’s initially reported 114,000 jobs added but falling short of economist estimates of 160,000, according to FactSet.

The unemployment rate dipped to 4.2% last month, down from July’s 33-month high of 4.3% and better than forecasts of 4.2%.

The government downwardly revised July job growth by 114,000 to 89,000 and June from 179,000 to 118,000, reporting 86,000 less jobs created during that period.

“August payroll data indicate risks are rising as the labor market is clearly softening,” Carson Group strategist Sonu Varghese wrote in emailed comments.

Financial markets reacted with caution to the tepid update: S&P 500 futures contracts were down slightly after the nonfarm payrolls announcement, while the bond market revealed a more severe response.

Yields for 2-year and 10-year U.S. Treasury notes fell to their lowest level in more than a year Friday, according to CNBC data, hinting traders are moving money into less risky assets in the face of economic uncertainty — lower bond yields indicate an increase in bond value, but generally signal a bad omen for stock prices as risk appetite dwindles.

Surprising Fact

This was the weakest August for job growth since 2017, when nonfarm payrolls increased by 135,000.

Key Background

Last month’s jobs report, which revealed much worse job growth and unemployment than economists predicted, induced a borderline panic in financial markets, as the S&P 500 cratered by nearly 5% due to heightened concerns the softening labor market forebode an imminent U.S. recession. Those fears eased slightly in intervening weeks, and the S&P recovered all the associated losses but agita about an economic slowdown tied to the cooling labor market lingered.

Big Number

818,000. That’s how much the Labor Department overestimated the growth of the labor market from March 2023 to March 2024, the government said last month in a regularly scheduled release, adding fuel to the notion that the employment situation may be rockier than previously thought.

Tangent

Arguably now the most crucial U.S. economic data point, only two more jobs reports are due before November’s presidential election. Both Vice President Kamala Harris and former President Donald Trump have unsurprisingly stumped as the best option to lead, with Harris pointing to the 16 million jobs added under the Biden administration and Trump pointing to the near 50-year-low unemployment rate the U.S. achieved before the COVID-19 pandemic caused the jobless rate to spike to a record high.