U.S. Payroll Growth Stalls in August, Bolstering Case for Fed Rate Cuts

U.S. nonfarm payrolls rose by only 22,000 in August, falling well short of the 75,000 expected and down from 73,000 in July, according to the Bureau of Labor Statistics. The unemployment rate ticked up to 4.3%, in line with forecasts, while prior months’ job growth was revised down by a combined 21,000—including a rare decline of 13,000 in June.

Wage pressures moderated, with average hourly earnings up 0.3% month-over-month, matching expectations but slower than July. On a year-over-year basis, earnings eased to 3.7% from 3.9%. Labor force participation improved slightly to 62.3%, suggesting more workers are returning to the job market despite weaker hiring demand.

The report strengthens the case for the Federal Reserve to resume rate cuts at its September meeting. Fed funds futures now imply sequential 25-basis-point cuts in both September and October, rather than a larger move in September. Chair Jay Powell has described the labor market as caught in a “curious balance,” where hiring demand has softened while immigration restrictions have constrained the supply of available workers.

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About Joe Palmisano

Joe Palmisano is Editorial Director for Connect Money, where he brings nearly three decades experience of market insights as a financial journalist, analyst and senior portfolio manager for leading financial publications, advisory firms, and hedge funds. In his role as Editorial Director, Joe is responsible for the selection of content and creation of daily business news covering the financial markets, including Alternative Assets, Direct Investment and Financial Advisory services. Before joining Connect Money, Joe was a financial journalist for the Wall Street Journal, regularly publishing feature stories and trend pieces on the foreign exchange, global fixed income and equity markets. Joe parlayed his experience as a financial journalist into roles as a Senior Research Analyst and Portfolio Manager, writing daily and weekly market analysis and managing a FX and US equity portfolio. Joe was also a contributing writer for industry magazines and publications, including SFO Magazine and the CMT Association. Joe earned a B.S.B.A. in Finance from The American University. He holds the Chartered Market Technician (CMT) designation and is a member of the CFA Institute.

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