The number of jobs added in the U.S had been steadily weakening for months, but this morning’s Jobs Report showed a surprise increase. In August, 162,000 jobs were added – the highest jump in 5 months and well above economist expectations of 56,000. The July figure was also revised from -23,000 jobs lost to +21,000 jobs added.
The labor market will have an important impact on upcoming interest rate decisions as the Fed follows a dual mandate of stable price and maximum employment. If employment remains firm, it will force the Fed to focus on inflation, which has been above their 2% target for 65 months.
Today’s unexpectedly solid employment report helps clear the path for a rate hike, and all eyes are on the Fed for their upcoming meeting on September 16th where Fed Funds Futures are currently pricing in a 60% probability of a rate hike.