August Jobs Report: Nonfarm Payrolls at 315,000; USD in Focus After Breakout

[MongiIG]

AUGUST JOBS REPORT KEY POINTS:

• U.S. employers add 315,000 payrolls in August, slightly above expectations of a gain of 300,000 jobs. The unemployment rate rises to 3.7% from 3.5%, disappointing forecasts
• Average hourly earnings climb 0.3% month-over-month, prompting the annual rate to remain unchanged at 5.2%
• Healthy employment growth by historical standards reduces the probability of a monetary policy pivot by the Federal Reserve

 

Update at 9:05 am ET

The U.S. dollar, as measured by the DXY index, maintained a slightly bearish bias after the NFP report crossed the wires despite the U.S. Treasury yields’ attempt to perk up. However, the greenback could resume its ascent soon as the employment data is not likely to alter the Fed’s tightening plans in the near-term. While wages may be growing at a slower pace, the extremely tight labor market will prevent the type of demand destruction needed to bring inflation back to the 2% target rapidly. Having said that, the FOMC may deliver another 75 basis points interest rate increase at its September gathering, in line with current market pricing. In addition, more monetary policy tightening should be expected at subsequent meetings later in the year.

DXY CHART VS US TREASURY YIELDS

DXY Chart Prepared Using TradingView

Original post at 8:40 pm ET

U.S. employers continued to add workers at a strong and remarkable pace for country navigating turbulent waters and presumably at the late stage of the business cycle, although job creation cooled noticeably compared to the start of the third quarter, when hiring activity surprised to the upside.

According to the U.S. Department of Labor, the economy generated 315,000 nonfarm payrolls (NFP) in August, versus the 300,000 expected, following a downwardly revised increase of 526,000 in July. The unemployment rate, meanwhile, rose to 3.7% from 3.5%, but the uptick was likely attributed to a jump in the participation rate which climbed to 62.4% from 62.2%.

Today's results show that the labor market remains extraordinarily resilient and extremely tight, despite the various headwinds battering U.S. firms, including runaway inflation and rising interest rates. The report, which clearly defies the doom-and-gloom narrative, also suggests that widespread hiring freezes and major headcount reductions are not yet taking place, a vote of confidence in the outlook by Corporate America.

US EMPLOYMENT DATA AT A GLANCE

Source: DailyFX Economic Calendar

 

 

Sep 2, 2022 | DailyFX
Diego Colman, Market Analyst