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Due to the observance of Labor Day, we are releasing our Monday Morning Perspectives today. Hopefully, everyone had a nice, relaxing long weekend!
Last Friday began with the release of the August jobs report.1 The U.S. economy added 187,000 jobs last month (well below the key figure of 200,000), while payrolls in June and July were revised down a combined 110,000, resulting in a three-month (June through August) average of 150,000 added, down from a 238,000 average gain between March and May.2 The unemployment rate unexpectedly rose to 3.8% from 3.5%, the highest since February 2022 — reflecting more Americans seeking work. The number of unemployed people increased by 514,000 to 6.4 million, employment levels rose by 222,000 to 161.5 million and the labor force participation rate increased to 62.8% from 62.6%, the highest since February 2020. Economists had expected unemployment to remain unchanged at 3.5%.
The August jobs report indicates the kind of cooling labor market that the Federal Reserve (Fed) has been trying to reach — and should keep the Fed on track to hold rates steady at its meeting this month. It does not, however, do enough to resolve the debate over whether it will raise rates again in November or December — as other data, such as consumer spending over the summer months, shows the broader economy remains strong. Shortly after the jobs report was released on Friday, Cleveland Fed President Loretta Mester told a European Central Bank conference, “In the labor market, some progress is being made in bringing demand and supply into better balance, but the job market is still strong,” signaling that she is not yet convinced that the Fed has gone far enough with rate hikes.3
This shortened work week will be relatively light from an economic reports standpoint. The factory orders report is expected to be released this morning, while the Fed Beige Book is due out tomorrow.4 Toward the end of the week, initial and continuing jobless claims reports are expected on Thursday, with the week wrapping up with the consumer credit report on Friday.
Sources:
1Bureau of Labor Statistics – August Employment Situation; 9/1/23
2Reuters – US unemployment rate spikes to 3.8%; labor market still has momentum; 9/1/23
3Investing.com – Fed seen likely done with rate hikes as job market cools; 9/1/23
4MarketWatch – U.S. Economic Calendar; as of 9/5/23
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