The US added 142,000 jobs in August and the unemployment rate ticked down to 4.2 percent, according to data released Friday by the Labor Department.
The new report is in line with economists’ forecasts of 161,000 jobs and a 4.2 percent jobless rate, and will be closely watched as the Federal Reserve prepares to reduce interest rates by at least a quarter point amid concerns the agency is behind the curve on cuts as hiring and job gains slow.
After holding interest rates at a 23-year high of 5.25 percent to 5.5 percent since last July, Fed Chair Jerome Powell declared the “time has come for policy to adjust” during a speech last month at the annual economic policy convening in Jackson Hole, Wyo.
Powell cited weakening labor conditions, saying the “labor market has cooled considerably from its formerly overheated state.”
Following devastating job losses in March and April 2020 at the onset of the pandemic, the labor market ran white-hot as the economy reopened and employers staffed up, peaking at 939,000 additional jobs in July 2021.
Hiring has slowed considerably from its post-pandemic surge, coming into line with pre-pandemic hiring, even with a massive downward revision last month.
The unemployment rate has also ticked up over the past year from a historic sub-4 percent run to 4.3 percent in July, almost a full percentage point above last year’s low point of 3.4 percent, Powell noted in his Jackson Hole address, adding it is “still low by historical standards.”
The September meeting of the Federal Open Market Committee is the last before the 2024 general election on Nov. 5.
The politically independent agency’s handling of rates has become increasingly politicized.
Some Democrats have pushed Powell and the committee to cut rates, citing the impact on housing affordability and the labor market, while former President Trump suggested in February that Powell might cut rates ahead of the election to help Democrats in the upcoming election.
Powell, a lifelong Republican appointed by Trump in 2017 and reappointed by Biden in 2021, has made clear the Fed will block out the political noise and base its decision on economic data.
