Only about 22,000 jobs were added to the U.S. economy in August and the unemployment rate crept up to 4.3%, according to the U.S. Bureau of Labor Statistics.
The dismal jobs report likely increases the prospect of a Fed rate cut later this month. That will be welcome news to prospective home buyers – however, mortgage rates are unlikely to drop much after the Fed initially takes action. It will likely take several rate cuts before buyers see rates drop in a meaningful way.
The number of unemployed people, at 7.4 million, was up from 7.2 million in July.
Among the unemployed, the number of new entrants decreased by 199,000 in August to 786,000, largely offsetting an increase in the prior month, the BLS says. New entrants are unemployed people who are looking for their first job.
The number of long-term unemployed – those jobless for 27 weeks or more – increased slightly to 1.9 million, up from 1.8 million in July.
The number of long-term unemployed has increased by about 385,000 so far this year. In August, the long-term unemployed accounted for 25.7% of all unemployed people.
The labor force participation rate was basically flat at 62.3%. The employment-population ratio was also basically flat at 59.6%.
Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3%, to $36.53 in August. Over the past 12 months, average hourly earnings have increased by 3.7%.
“As football season kicks off, August’s jobs report may be the turnover that forces the Fed to change its play calling—starting with its potential 25 basis point rate cut at its September meeting,” says Sam Williamson, senior economist for First American, in a statement. “The underwhelming jobs report reinforces the picture of a labor market that’s losing momentum without collapsing. The
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