U.S. Employment Growth Slows, But Labor Market Remains Resilient

U.S. employment increased less than expected in August, with a notable drop in the jobless rate to 4.2%. While wage growth remained solid, indicating underlying strength in consumer spending, the overall pace of labor market expansion has slowed. The Federal Reserve is likely to consider a quarter-point rate cut amid these mixed signals.

U.S. employment rose less than anticipated in August, but a drop in the unemployment rate to 4.2% suggested the labor market is stable enough to avoid a drastic interest rate cut from the Federal Reserve. The Labor Department's report also indicated robust wage growth, which could bolster consumer spending and stave off a recession.

Despite these positive signs, the employment momentum has decelerated, with June and July figures showing 86,000 fewer jobs than initially estimated. This slowdown has prompted the Federal Reserve to consider a 25 basis point rate cut in its upcoming policy meeting, rather than a more aggressive approach.

The construction sector led employment gains last month with 34,000 new jobs, followed by healthcare with 31,000. However, manufacturing and retail sectors faced job losses. Average hourly earnings rose by 0.4%, continuing a trend of solid wage growth. The unemployment rate's decline from 4.3% in July highlights improving labor conditions, though the rise in part-time employment due to economic reasons suggests underlying uncertainties.

(With inputs from agencies.)