U.S. NFP: Smaller-than-expected employment gain in August – RBC

Nathan Janzen, the senior economist at Royal Bank of Canada (RBC), notes that the U.S. employment rose 130k vs expectations closer to 160k, while the unemployment rate held steady at 3.7% and the wage growth ticked lower but held above 3%.

• “The 130k increase in August employment in the US was a bit softer than expected, and won’t do much to calm concerns that economic growth is slowing in the second half of 2019 under the weight of escalating international trade tensions.  Still, the unemployment rate held steady at 3.7%, right around multi-decade lows.
• Wage growth ticked a touch lower but is still running above a 3% rate.  The headline employment numbers are often volatile, but even if the 130k pace in August were to be sustained, it would probably be enough to put further downward rather than upward pressure on the unemployment rate.
• Fed policymakers will still likely take some slowing in payroll employment growth this year as validation for further rate cuts – but that also helps to decrease the odds that industrial weakness will spill over into a broader slowdown in the economy.”