09/06/2024

U.S. Unemployment Falls

The labor market is cooling at a measured pace

U.S. employment increased less than expected in August, but a drop in the jobless rate to 4.2 percent suggested an orderly labor market slowdown continued and probably did not warrant a big interest rate cut from the Federal Reserve this month.

The below-expectations rise in nonfarm payrolls reported by the Labor Department on Friday likely reflected a seasonal quirk that tends to push the initial August print lower. Nonetheless, labor market momentum is slowing, with the closely watched employment report also showing the economy added 86,000 fewer jobs in June and July than previously reported.

"The labor market is cooling at a measured pace," said Jeffrey Roach, chief economist at LPL Financial. "Businesses are still adding to payrolls but not as indiscriminately. The Fed will likely cut by 25 basis points and reserve the right to be more aggressive in the last two meetings of the year."

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