Rising Unemployment Cuts Chances Of Fed Raising Interest Rates This Month

U.S. unemployment for the month of August has nudged up to 3.8%, maybe signaling some of the labor market cooling that the Federal Reserve was looking for. However, a recent trucking bankruptcy and the Hollywood strike may have temporarily impacted the data. The absolute gain in nonfarm payrolls for August was 187,000, that’s significantly below the 271,000 monthly average gain over the prior 12 months. This, and other recent data, now makes a September interest rate hike unlikely, unless the upcoming CPI inflation data on September 13 proves very unexpected.

The Unemployment Picture

Today’s release breaks U.S. unemployment from the 3.4% to 3.7% range that it has maintained since March 2022. Previously we’ve seen job openings decline from high levels, but unemployment had generally held up regardless. For August employment fell in transportation and warehousing, in part due to the bankruptcy of the trucking company, Yellow, so it remains to be seen if that’s and the screenwriters’ strike are driving unemployment higher.