2024-09-07 02:09:28
Developments in the labor market are considered to be a key factor in the monetary policy of the US Federal Reserve. Signs of weakness can be interpreted as a signal for falling interest rates.
In the US, the labor market situation has continued to weaken. According to the US Department of Labor, the US economy created fewer jobs than expected in August. The increase in employment in the previous two months was also revised downwards sharply. Meanwhile, the unemployment rate fell slightly as expected after reaching its highest level since October 2021 in July. Meanwhile, hourly wages rose slightly more than economists had predicted.
The number of new jobs rose to 142,000 in August, the ministry in Washington announced. However, the number of new jobs for the previous two months was revised significantly downwards, by 86,000. In addition, analysts had on average expected a stronger increase in jobs in August of 165,000.
“The previous month’s figure was revised downwards. A downward trend is therefore unmistakable,” said chief economist Thomas Gitzel of VP Bank. With the report, the Fed has “free rein to ease monetary policy.”
The unemployment rate, however, fell slightly by 0.1 percentage points to 4.2 percent in August, according to the ministry. However, it is only just below the highest rate since October 2021, which was 4.3 percent in July. Wage developments were somewhat stronger. Month-on-month, wages rose by 0.4 percent in August, after only increasing by 0.2 percent in the previous month. Year-on-year, hourly wages rose by 3.8 percent.
Wage developments have an impact on general inflation. The inflation rate in the US recently fell to 2.9 percent in July. This means it is once again approaching the US Federal Reserve’s target of two percent.