Key facts
- U.S. nonfarm payrolls are expected to have increased by 56,000 jobs in August.
- The unemployment rate is forecast to remain steady at 4.1% in August.
- Job growth in August is anticipated to rebound from a decline in July.
- The termination of Temporary Protected Status for Haitian immigrants is expected to create a drag on payrolls.
- Annual wage growth is estimated to have slowed to 3.0% in August.
- The 30-year fixed mortgage rate reached a more than one-year high of 6.71%.
U.S. job growth is expected to rebound in August after a decline in July, with economists forecasting an increase of 56,000 nonfarm payrolls. The unemployment rate is anticipated to hold steady at 4.1%.
Labor market momentum has decelerated, partly attributed to oil price shocks and supply chain strains. Economists noted that while businesses felt some prior issues were resolved, new uncertainties have emerged. Job growth was also impacted by President Donald Trump's import tariffs.
August payrolls often undershoot expectations due to seasonal factors. A rebound in local government education employment and recovery in leisure and hospitality are expected to support job gains. However, these could be offset by job losses related to the termination of Temporary Protected Status for Haitian immigrants, estimated to be around 15,000.
Some economists suggest the drag from TPS expiration could be temporary, with affected individuals potentially moving to other visa categories. If August's employment report is weaker than expected, it may not solely be due to TPS expiration, as other hiring indicators have been soft.
The Trump administration's immigration policies, including deportations and TPS revocations, are shrinking the labor pool. This reduction in labor supply, along with retirements and lower immigration flows, is contributing to a lower unemployment rate, though some expect it to rise to 4.2% due to an excessive drop in the labor force participation rate.
The employment report is unlikely to influence the Federal Reserve's upcoming interest rate decision, with focus on the Consumer Price Index. Annual wage growth is estimated to have slowed to 3.0% in August from 3.2% in July. Fed Governor Christopher Waller indicated a preference for keeping rates steady if inflation data confirms cooling pressures.
Financial markets currently price in a 50% chance of a rate hike this month. Concerns about inflation and a lack of forward guidance from the Fed have contributed to rising U.S. Treasury yields. This has pushed the 30-year fixed mortgage rate to a more than one-year high of 6.71%, potentially impacting the housing market.