US hiring rose in August but fell short of forecasts after downward revisions to the prior two months, a development likely to fuel ongoing debate over how much—and not whether—the Federal Reserve should cut interest rates. Nonfarm payrolls increased by only 142,000 last month, leaving the three-month average at the lowest since mid-2020, Bureau of Labor Statistics data showed Friday. The unemployment rate fell to 4.2%, the first decline in five months, reflecting a reversal in recent layoffs.
In remarks after the release of the jobs numbers, Fed Governor Christopher Waller said the latest batch of data “requires action,” adding he would advocate for “front-loading rate cuts if that is appropriate.” Sonu Varghese, a global macro strategist at Carson Group, offered that “the labor market is clearly softening, and the Fed needs to step in to cut off tail risks. The report seals the deal for a September rate cut, but the big question really is whether the Fed goes big.”