The U.S. unemployment rate points higher than expected and the Dow headed for the third week of losses after a disappointing non-payroll report.
On Friday morning, the U.S Bureau of Statistics released the August job growth report, which was lower than experts forecasted. The Dow Jones opened lower minutes after releasing the non-payroll report.
The reported numbers came in below the Dow estimates by 3.000, which caused its index to carry significant losses. According to the report, the United States added 315.000 new jobs, a 3.000 decrease from the expected 318.000.
Wall Street posted one of the worst performing weeks over the past 8 weeks, and the Dow Jones is heading for the third week of losses.
The following are the New York Stock Exchange market results as of 3: 30 PM.
The S&P 500 declined by 1%, the tech stocks traded lower with a loss of 1.1%, and the Dow Jones lost 288 points.
The inflation rate is showing signs of slowing, yet it is still higher than it should be. Market experts believe that there is a 50% possibility of 50 basis point interest rate hikes in September and October. Yet others think that, based on the August nonpayroll report, the Federal Reserve policymakers are more likely to increase their interest hikes by 75% in the next two months.
The U.S added 315,000 new jobs in August, which is considered the lowest gain since April 2021. As for the unemployment rate, August’s numbers were shocking for investors, and the unemployment rate rose to 3.7%.
According to the latest speech of the FED chairman, the economy was hoping that the labor market would get softer in some sense. Rising interest rates and the cost of goods and services are major concerns for the average American worker.
Several businesses and factories were forced to lower their working power due to rising production and manufacturing costs. As for wages, the reports show that they are on an upward trend, though in small amounts. The report suggests that wages increased by 0.3% in August. On an annual basis, August wages increased by 5.2% compared to August 2021.
Professional and business services led the economy’s gains by adding 68.000 new positions. Health care comes next, offering 48.000 new jobs, followed by retail with 44.000 jobs.
The unusual thing about this report is leisure and hospitality. Over the past seven months and during the pandemic, these sectors were among the top gainers. Yet, in August, leisure and hospitality added just 31.000.
Rising interest rates and borrowing costs have affected the leisure and hospitality sectors, which makes them one of the first businesses that will crash due to high inflation and interest rates.
In terms of the energy and gas markets, the US White House predicts that gas prices will fall in the coming months. Gas prices in the U.S. have posted higher levels in the past few months.
In terms of the economic outlook, August’s poor job growth reports suggest that the economy is still in the recovery phase and the possibility of a recession possibility remains higher.