U.S. Adds 162,000 Jobs in August as Labor Market Rebounds

Friday’s jobs report could play an important role in determining whether the Federal Reserve raises interest rates at its September policy meeting.

The U.S. labor market showed a notable improvement in August, potentially giving the Fed’s increasingly hawkish policymakers stronger grounds to support another rate increase at the meeting scheduled in less than two weeks.

The government’s Nonfarm Payrolls report released Friday showed that employers added 162,000 jobs in August. The figure significantly exceeded the 56,000 consensus forecast and followed a revised gain of 21,000 jobs in July. July’s figure was initially reported as a decline of 23,000.

The unemployment rate remained at 4.1%, matching both economists’ expectations and July’s reading.

Financial markets reacted quickly to the stronger-than-expected employment data. Bitcoin fell about 2%, dropping below $80,000. The yield on the 10-year U.S. Treasury rose 3.3 basis points to 4.80%, while the two-year Treasury yield climbed seven basis points to 4.40%. U.S. stock futures also moved slightly lower.

Fed Rate Decision Remains Uncertain

Fed Chairman Kevin Warsh put the possibility of a September rate hike back in focus last week with a notably hawkish speech at Jackson Hole.

However, Fed Governor Chris Waller, backed by Federal Reserve Bank of New York President John Williams, helped ease those expectations this week by indicating that a rate increase at the upcoming meeting was by no means certain.

The latest employment figures provide another argument for policymakers favoring tighter monetary policy. Still, the Fed’s decision is unlikely to rest on the jobs report alone.

Next Friday’s August consumer price index report is expected to be another crucial piece of data as officials assess whether inflation is cooling enough to justify keeping rates unchanged.