MNI BRIEF: US Aug Payrolls Slow As Expected; Supply Improves

U.S. employers added 315,000 workers in August, slowing from the slightly downward revised 526,000 in July as markets expected, and the unemployment rate rebounded two-tenths to 3.7% as 786,000 people flowed into the workforce. S&P futures rose 0.6% on relief that the report wasn't stronger than expected, and the yield curve moved steeper on the data.

Wage growth also slowed to 0.3% from 0.5%, good news for Federal Reserve officials looking for signs that the labor market is coming off a boil. The FOMC is set to debate whether to hike by 0.75 pp for a third time later this month, with one more major piece of inflation data to come. (See: MNI INTERVIEW: Fed Likely To Hike Another 75BPs In Sept-Haslag)

Low labor supply, a major driver of labor market tightness, improved a bit in the month. The labor force participation rate increased 0.3 pp to 62.4% but remains 1.0 pp below the February 2020 level. The employment-to-population ratio was little changed at 60.1%, also 1.1pp below its February 2020 value.