The Bureau of Labor Statistics (BLS) reported that there were 142,000 jobs created in August, which was below estimates of 160,000. Negative revisions to June and July shaved 86,000 jobs from those months combined. The unemployment rate fell from 4.3% to 4.2%, but for the wrong reasons as noted below.
What’s the bottom line? There were signs of labor sector weakness throughout this report, as the headline job number was below estimates while year-to-date revisions have cut 365,000 jobs from the data. In addition, the number of part-time workers in August rose by 527,000 while full-time workers fell by 438,000. This means the unemployment rate declined because the data counts people who are working part-time when they could not find full-time opportunities. The cooling consumer inflation we’ve seen in recent months combined with signs that the job market is slowing have led to growing calls for the Fed to begin cutting their benchmark Fed Funds Rate, which is the overnight borrowing rate for banks. This report was a crucial data point for the Fed ahead of their next meeting on September 18, and the weak report keeps the Fed on track to cut rates at that time.