Just 151,000 New Jobs Added In August, Fed Rate Hike Not Likely

The U.S. economy added 151,000 net new jobs in August, below consensus expectations for 180,000. Meanwhile, the labor force participation rate remained stable at 62.8%, as did the jobless rate at 4.9%, though it was expected to tick slightly lower to 4.8% for the month.

The closely-watched U6 rate, or “underemployment” rate, which measures unemployed workers and those working part time for economic reasons, remained stuck at 9.7%.

July job gains were revised up to 275,000 from 255,000, though June’s figures were revised down to 271,000 from 292,000.

Wall Street expectations for a September rate rise as measured by federal funds futures dropped to 21% from 27% following the jobs report.

Fed officials are likely to view the August jobs report as a reason to proceed with caution, though they are unlikely to take it at face value.

“The August employment report was not a disaster but it was just weak enough that any chance that Janet Yellen and her band of doves might think about surprising us and raising rates later this month just went out the window,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

“With 3Q GDP growth likely to print in the upper 2[%]s, we remain confident enough in the trajectory of the economy to continue to see a high likelihood of a hike in December (around 70%). But markets will likely not have to worry about the Fed before then,”Evercore ISI’s Krishna Guha said.