An expanding labor market isn’t boosting wages, the BLS’s August Jobs report indicated Friday, sending stocks on Wall Street firmly higher.
The U.S. economy added more than 300,00 new jobs last month, the Labor Department said Friday, while wage growth eased even as the overall market expanded, suggesting the Federal Reserve may be able to engineer a so-called soft landing for the world’s biggest economy.
The Bureau of Labor Statistics said 315,000 new jobs were created in August, with headline unemployment rate ticking modestly higher from its post-pandemic low to 3.7% .
The August tally was around 15,000 higher than the Street consensus forecast of 300,000. The BLS also revised its July jobs addition figure modestly lower from its original estimate of 528,000 to 526,000.
Average hourly earnings rose 5.2% from last year, and 0.3% on the month, to $32.36, while the number of hours worked held at 34.5. The labor force participation rate improved, as well, to 62.4%.
Earlier this week, payroll processing group ADP reported figures that suggested a slowdown in private hiring, and used its new model to estimate August employment growth of around 132,000, well shy of the Street’s 288,000 forecast.
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The ADP reading forms a key part of this week’s data releases centered around the jobs markets, particularly following yesterday’s July JOLTs update which showed a big jump in overall vacancies, which were pegged at 11.239 million, adding to concerns that faster-than-expected wage increases will be needed to tempt Americans back into employment.
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Stocks jumped higher on the news, with futures tied to the S&P 500 marked 30 points higher on the session while the Dow Jones Industrial Average indicating a 195 point opening bell gain.
Benchmark 10-year Treasury note yields edged lower, to 3.256%.
The CME Group’s FedWatch tool suggests a 70% chance of a 75 basis point rate hike later this month, up from just 41% at the beginning of August, while the U.S. dollar index eased 0.57% from its highest levels in 20 years against a basket of six global currency peers to around 109.30.
