US jobs growth smashes forecasts, stoking Fed rate hike debate

The United States added 162,000 jobs last month, smashing forecasts and signalling renewed momentum in a labour market that had shown signs of cooling.

Hiring outpaced the 65,000 positions economists polled by FactSet had predicted, while the Labour Department simultaneously revised June and July payrolls upward by a combined 55,000 jobs. The department also corrected its July estimate, now showing employers created 21,000 positions that month rather than the initially reported loss of 23,000.

Hiring concentrated in services and manufacturing

Restaurants and bars drove much of the expansion, adding 59,000 jobs, followed by construction companies with 22,000 and manufacturers with 16,000. The labour force itself swelled by 683,000 people after contracting in June and July, suggesting renewed confidence among workers who had previously sat on the sidelines.

Rate-hike pressure builds for Federal Reserve

The robust figures may push the Federal Reserve toward raising its key short-term interest rate at its next meeting. Central bankers have been balancing the need to cool inflation against the risk of stalling employment growth, and the stronger-than-expected jobs data tilts the calculus toward further monetary tightening.

Yet households continue to face affordability pressures that wage growth has failed to offset. Average hourly earnings climbed 3.1 per cent year-over-year, the slowest annual pace since May 2021. That deceleration in pay gains, even as hiring accelerates, underscores the squeeze many American workers face as the cost of living remains elevated.

Source: South China Morning Post