The US Bureau of Labor Statistics reported that 142,000 nonfarm jobs were added to the labor market in August, below expectations for 165,000. The unemployment rate eased to 4.2% and average hourly wages moved higher to 3.8%. The Morning Brief welcomes RSM Chief Economist Joe Brusuelas and Academy Securities Head of Macro Strategy Peter Tchir to discuss and react to the August jobs print. Brusuelas looks back to July’s data set that worried Wall Street of an impending recession: “I’m going to set July aside, and say that’s a seasonal issue. That does not mean that the labor market is turning over, it just means we’re cooling the 4.2% unemployment rate. Well guys, this just screams 25 basis points at the Fed [Federal Reserve]. This report doesn’t scream 50 basis points on its surface.” Federal Reserve officials were closely watching this report as a guide for their interest rate-cutting policies ahead of the central bank’s September meeting. “I think the unemployment rate is key,” Tchir says, agreeing with Brusuelas. “That’s going to keep the Fed on hold. There are just enough jobs this month even with the downward revisions. So I think the market is going to have to digest probably only 25 [basis points].”
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