Soft US Jobs Cast Doubt on September Fed Hike

The most recent US labor market report showed a decline in payrolls and a drop in the unemployment rate, with wage growth at 3.2% coming in below expectations. Jennifer McKeown, Chief Global Economist at Capital Economics, stated that softer wage growth may reduce the likelihood of a Federal Reserve rate increase in September. McKeown noted that July consumer price index data and the next payroll report before the September Fed meeting will be critical to policy decisions. The report also showed a falling labor force participation rate, which McKeown said raises questions about whether structural factors or job quality preferences are driving the decline.

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