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- US: Nonfarm Payrolls showed mixed results – UOB
US: Nonfarm Payrolls showed mixed results – UOB
Senior Economist at UOB Group Alvin Liew assesses the latest release of the US NFP for the month of August.
Key Takeaways
The latest US Labor Market Report showed a mixed picture. Even as job creation was above expectations at 187,000 in Aug (versus Bloomberg est 170,000), the jobs prints for Jun & Jul were revised lower by 110,000. Jobless rate spiked unexpectedly to 3.8% (Jul: 3.5%), highest since Feb 2022 as unemployed numbers rose by half million and participation rate rose 0.2ppt to 62.8%. Wage growth was a tad below forecast, and m/m pace was slowest since Feb 2022.
Disparity in job creation was surprisingly stark within services in Aug as job increases were led mainly by health care and social assistance while specific factors drove job losses in transport and information sectors.
The jump in Aug jobless rate and slower wage growth added to market expectations for the Fed to keep its policy rate unchanged in Sep and rest of the year. We continue to expect no rate cuts in 2023, with the FFTR terminal rate at 5.50% lasting through this year. Another 25-bps hike in 2H remains a risk but the Fed hiking cycle is likely near/at its end.
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