US | Is the labor market starting to show some cracks?

Summary

Although the Unemployment Rate (UR) increase raises concerns, it remains just 0.1 percentage points away from the Federal Reserve's long-term target, and the July figure didn't trigger the Sahm Rule due to changes in the calculation. Ongoing monitoring of the UR is necessary to assess future risks.

Key points

• Key points:
• Private nonfarm payrolls grew by only 114,000 jobs in July, with downward revisions for May and June. However, positive job creation continues, with 1.4 million jobs added from January to August, at a pace close to 74% of the previous year's growth rate.
• Labor force participation has grown by 697,000 over the past two months, surpassing the labor market's capacity.
• Job creation trends remain moderate, with the job openings rate steady at 4.9% and no sharp decline in sight.
• Average hourly wages increased by 0.2% month-on-month in July, with an annual growth rate of 3.7%.
• The Fed may begin a rate-cut cycle in September due to weaker labor market strength and easing inflation.

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