NEW YORK (Multibagger) - U.S. employment growth fell short of expectations in August, but the decline in the jobless rate to 4.2% indicated a steady labor market slowdown that may not necessitate a significant interest rate cut from the Federal Reserve this month.
Nonfarm payrolls rose by 142,000 jobs last month, following a downwardly revised 89,000 increase in July, as reported by the Labor Department's Bureau of Labor Statistics. Economists had predicted a gain of 160,000 jobs, with estimates ranging from 100,000 to 245,000.
After the release of the data, market expectations for a 50 basis point cut at the upcoming Federal Reserve meeting in mid-September increased.
Market Reaction:
STOCKS: E-minis initially erased early losses and were up by 0.05%.
BONDS: The yield on benchmark U.S. 10-year notes dropped by 3.4 basis points to 3.699%, while the two-year note yield fell by 7.5 basis points to 3.6772%.
FOREX: The dollar decreased by 0.24% to 100.80.
Analysis:
Experts believe that despite the lower-than-expected job growth, the labor market remains stable. The Federal Reserve is likely to implement a 25-basis-point rate cut rather than a 50-basis-point cut, with the option to increase it later if necessary. The overall market sentiment is positive, with expectations of a rate cut providing support for continued economic growth.