Friday’s jobs report also showed that wage gains are easing, a trend that may help signal to the Fed that inflation pressures are cooling.
| The nation’s employers added 187,000 jobs in August, evidence of a slowing but still-resilient labour market despiteLast month’s job growth marked an increase from July’s revised gain of 157,000 but still pointed to a moderating pace of hiring compared with the sizzling gains of last year and earlier this year. From June through August, the economy added 449,000 jobs, the lowest three-month total in three years.
A decelerating job market could help shift the economy into a slower gear and reassure the Fed that inflation will continue to ease. The central bank’s streak of 11 interest rate hikes has helped slow inflation from a peak of 9.1 per cent last year to 3.2 per cent now. Given signs that inflation is slowing, many economists think the Fed may decide no further rate hikes are necessary.
Still, Faucher cautioned that the economy may not have yet absorbed the full impact of the Fed’s rate hikes, which is why he still expects a recession in early 2024. Taken as a whole, some economists saw Friday’s report as reflecting an economy that may be returning to its pre-COVID state, before the pandemic recession struck in 2020, followed by an explosive economic recovery.“The 187,000 gain in non-farm payrolls, jump in the unemployment rate and slowdown in wage growth in August all add to the evidence that labour market conditions are approaching pre-pandemic norms,” Andrew Hunter of Capital Economics wrote in a research note.
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