U.S. job growth picked up in August but missed economists’ expectations, while the unemployment rate was little changed.

The U.S. Department of Labor on Friday reported that employers added 142,000 jobs in August, compared to the 160,000 gain that was projected by LSEG economists.

The unemployment rate also dipped slightly to 4.2%, in line with expectations, after it had unexpectedly risen to 4.3% in July, which was the highest level for the jobless rate since October 2021.

The number of jobs added in the prior two months were both revised downward, with job creation in June revised down by 61,000 from a gain of 179,000 to 118,000, while July was revised down by 25,000 from 114,000 to 89,000. With the revision, July’s job creation was the lowest nonfarm payrolls reading since December 2020.

FED’S POWELL: ‘THE TIME HAS COME’ FOR INTEREST RATE CUTS

Private sector payrolls missed LSEG economists’ expectations, with 118,000 jobs added against a prediction of 139,000. Manufacturing payrolls declined by 24,000 in August, below estimates that expected the sector’s employment level to remain flat.

The construction sector saw employment rise by 34,000 in August — above the average monthly gain of 19,000 over the last 12 months. Health care employment increased by 31,000 jobs, below the 12-month average of 60,000.

Average hourly earnings for all employees on private nonfarm payrolls rose by 14 cents, or 0.4%, to $35.21, which brings gains over the past 12 months to 3.8% through August.

The labor force participation rate remained at 62.7% in August and has been little changed over the course of the year.

The long-term unemployment picture was virtually unchanged in August, with the number of people who have been jobless for 27 weeks coming in at 1.5 million. The long-term unemployed account for 21.3% of all unemployed people.

Multiple jobholders increased by 65,000 to 8,538,000, and the number of part-time workers increased by 527,000, while full-time workers decreased by 438,000.

FED’S ACTIONS SPOKE LOUDER THAN WORDS TO MARKETS IN FIGHT AGAINST INFLATION, RESEARCH FINDS

Federal Reserve Chairman Jerome Powell has signaled that the central bank is prepared to cut interest rates at its meeting this month. (Roberto Schmidt/AFP via Getty Images / Getty Images)

Policymakers at the Federal Reserve have been closely monitoring the labor market ahead of a widely anticipated interest rate cut later this month. Interest rates have been at the highest level in 23 years amid the central bank’s bid to tamp down inflation, with the benchmark federal funds rate sitting at a range of 5.25% to 5.50%.

Markets have expected the Fed to announce a 25-basis point cut at their next policy meeting on Sept. 17 and 18, although the new data showing continued softness in the labor market could boost the case for a 50-basis point cut.

In response to the August jobs report, stock index futures pared losses and bond yields fell, with the 10-year Treasury yield hitting its lowest level since June 2023. Futures traders were pricing in a 52% probability of a 50-basis point rate cut by the Fed.

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“A softer-than-expected jobs report may support those in favor of a 0.5% rate cut on September 18, but the jury is likely still out,” Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley, said. “In the meantime, markets are likely to be sensitive to any other data that suggests the economy is cooling off too much.”