Job growth appears to have cooled slightly in the United States, with wage increases firming in August. This would further slow the US economy, meaning the Federal Reserve would not need to raise new interest rates. Bloomberg reports.
The United States jobs report released last Friday showed that about 170,000 jobs were added in August, while the unemployment rate fell to a historic low of 3.5 percent. Average job growth over the past three months has been the slowest since the start of 2021.
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If the U.S. is to reach its target inflation rate of 2 percent, it will need a period of softer labor market conditions and slower economic growth. That’s the conclusion of Fed Chairman Jerome Powell at the annual Fed Symposium in Jackson Hole.
The figures are corroborated by other data sets, which will be made public later this week. For example, there would have been fewer vacancies in July, indicating that the supply and demand for workers was better balanced. This reduces pressure on wages and ultimately lowers inflation. ‘Rebalancing has taken the pressure off the kettle. “Salary increases will slowly but surely come down,” Powell said.
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Central bank officials will be given new inflation indices next Thursday, which will also show core inflation – excluding food and energy prices – by region. July is expected to rise 0.2 percent for the second month in a row. This would mark the smallest increase since the end of 2020.
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