Author: Just Summit Editorial Team
Source: Federated Hermes
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US nonfarm payrolls unexpectedly surged in August, adding 162,000 jobs versus expectations of 55,000. This strong report, coupled with upward revisions to prior months, increases the odds the Federal Reserve will hike rates by 25 basis points at its September meeting to 61%. Equities have already reacted negatively to this news.
The labor force participation rate also rose, and wage growth slowed to 3.1% year-over-year, a five-year low. This suggests underlying economic strength without fueling significant inflation. However, the ADP private payrolls report disappointed, and the JOLTS data shows job openings remain well below their peak.
We need to watch next week's August CPI report closely for confirmation of slowing inflation. Until then, the market will likely remain focused on the Fed's rate path, which is now leaning more hawkish given this jobs data.
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