NFP: Broad slowdown in hiring cannot be ignored

The US official employment report released today showed that the economy added 130K jobs in August. According to analysts at Wells Fargo, the slower hiring suggest that more easing from the Federal Reserve seems likely.

Key Quotes:

“Although there were a few good numbers in the August employment report, including stronger wage growth, rising labor force participation and a rebound in the average workweek, a broad slowdown in hiring cannot be ignored.”

“Employers added a total of 130K new jobs, but only 96K of those were in the private sector. Preliminary operations for the 2020 Census led to the hiring of 25,000 temporary federal workers.”

“More encouraging was the 0.4% rise in average hourly earnings, although following a similar gain last August, the year-over-year change edged down to 3.2%.”

“Yes, the labor market remains tight and stronger productivity growth gives some scope for companies to offer higher wages without cutting into profits. However, the job opening rate has edged lower over the past year, while the share of small businesses raising compensation has rolled over since 2018.”

“Consumer fundamentals remain in good shape, but we expect the FOMC to cut the fed funds rate another 25 bps at its meeting later this month to offset the lingering headwinds on the economy stemming from slowing global growth and trade policy uncertainty.”

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