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The US Employment Report for August showed a partial reversal of last month’s downbeat numbers that roiled global markets. Nonfarm payrolls added 142,000 in August, while July’s lower-than-expected gains were revised down further to 89,000 (−25,000 revision) and June was revised down to 118,000 (−61,000). Unemployment ticked down by 48,000 in August, lowering the rate to 4.2% from 4.3% in July.
While the report offered relief that the labor market continues to cool at a sustainable pace, the modest pace of hiring and uncertainty of revisions remain the focus going forward. August’s report does not change our labor market outlook: job gains have softened over the past year, but indicators of layoffs and unemployment claims still remain low by historical standards.
This may be what a soft landing in the labor market looks like. Many labor market metrics are now at or slightly below 2019 levels but without signs of deterioration. This report should not alter the Fed’s course. We continue to expect September’s rate cut will be 25 basis points — signaling normalization rather than outright weakness. The turn in interest rates should help boost business activity and improve the hiring outlook into 2025.
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