The unemployment rate fell in August for the first time since March, dropping to 4.2 percent, as the U.S. economy added 142,000 nonfarm payroll jobs, according to data released Friday by the Bureau of Labor Statistics (BLS).
Economists now expect nonfarm payrolls to rise by 161,000 in August, up from an earlier estimate of a 114,000 gain in July, and the unemployment rate to fall to 4.2 percent. According to The job gains follow a disappointing July report and a downward revision of the more than 800,000 jobs the Biden administration said it would create between April 2023 and March 2024, according to MarketWatch. (Related: Corrections reveal one-third of jobs announced by Biden administration in one year didn't actually exist)
Meanwhile, employment growth in July was revised downward. Decreased from 114,000 to 89,000, a decrease from the increase in June It increased from 179,000 to 118,000.
Overview of upcoming employment reports, weekly jobless claims and implications for Federal Reserve policy
• 📊 Projected job gains: About 161,000 in August (up from 114,000 in July)
• 📉 Projected unemployment rate: 4.2% (slight decrease)
• 📊 Four-week moving average of unemployment claims:… pic.twitter.com/Y2o3I37UVk— Mandeep Hullar (@mbhullar) September 5, 2024
Inflation in July was 2.9% year-on-year, well above the Federal Reserve's target of 2%. To combat rising inflation, the Federal Reserve Board left the target for the federal funds rate unchanged at 5.25% to 5.50% at its July Federal Open Market Committee (FOMC) meeting, marking the eighth consecutive meeting in which the rate has been kept unchanged.
The FOMC is expected to cut its target rate in September, with Chairman Jerome Powell saying “it is time to adjust policy” in a speech at the Kansas City Federal Reserve Bank's Jackson Hole Symposium in August. 59% of interest rate traders expect a 0.25% cut, while 41% expect a 0.5% cut. According to to CME Group's FedWatch tool.
Lowering the Federal Reserve's target federal funds rate could lead to more job growth by lowering borrowing costs for businesses and consumers and giving companies access to more capital.
Inflation has driven prices up by more than 20% since President Joe Biden took office in January 2021. The combination of high inflation and high interest rates has pushed many Americans into bankruptcy, with delinquent credit card balances reaching a 12-year high in the first quarter of 2024, according to the Federal Reserve Bank of Philadelphia.
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