(Reuters) – The U.S. economy added fewer jobs than expected in August but the unemployment rate slowed as expected to 4.2 percent, the Labor Department’s monthly report showed on Friday, suggesting that the orderly slowdown in the labor market is continuing and is unlikely to warrant a major interest rate cut by the Federal Reserve this month.
The report said 142,000 nonfarm jobs were created last month, compared with an average forecast of 160,000 among economists polled by Reuters.
The weaker-than-expected job creation is unlikely to signal a deterioration in labor market conditions, as August figures tend to initially come in below estimates and recent trends, before being revised upwards later.
Hiring is generally picking up in the education sector, but the start of the new school year varies by state, which can distort so-called seasonal factors.
The June figure was revised sharply downwards, to 89,000 against 114,000 announced in the first estimate.
The unemployment rate, for its part, stood at 4.2% in August, as expected by analysts and against 4.3% in July, its highest level in three years.
The drop in the unemployment rate follows four consecutive monthly increases.
The Labor Department report also showed that average hourly earnings rose 0.4 percent last month, compared with a revised 0.1 percent decline in July, bringing the year-over-year increase to 3.8 percent. The consensus had been for a 0.3 percent increase month-over-month and 3.7 percent increase year-over-year.
The yield on 10-year Treasuries extended its losses after the report to hit its lowest since June 2023, although the reaction has since subsided. It was down 3.8 basis points at 3.6948% by 1249 GMT.
The yield on the two-year bond lost almost 8 basis points to 3.6731%.
U.S. stock index futures limited losses after the data, forecasting a flat opening for the Dow Jones and Standard & Poor’s 500, while the Nasdaq is expected to open down 0.24%.
(Written by Lucia Mutikani, Diana Mandiá, edited by Blandine Hénault)
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