What's going on?

Data released on Friday showed that the US economy added fewer jobs in August than economists were expecting – although that might not be the full story.

What does this mean?

The data showed that the pace of job growth slowed versus the previous two months � but that wasn�t really surprising because June and July were exceptionally strong months for job creation. Some economists pointed out that the first estimate of August jobs data routinely falls short of expectations but then gets revised higher over subsequent months. If that holds true, Friday�s data will be seen as more �middle-of-the-road.�

Why should I care?

The bigger picture: Wages aren�t increasing as quickly anymore – which could have an effect on various investments.
Data on US wages was also released on Friday. They grew 2.7% in July versus 12 months prior, which was the biggest growth rate since the 2008 financial crisis. However, in August that growth rate was only 2.4%. The point? The pace of wage growth decelerated. That could have an impact on, say, companies from around the world that sell products to US consumers. Also, it suggests pressure on inflation in the US has moderated somewhat (because people are less able to pay higher prices). It will be important to watch how this metric develops in the coming months.


For markets: Investors are very focused on what the US Federal Reserve (�the Fed�) will do at its next meeting.
Friday�s data was the last major piece of employment data before Fed officials decide on September 21st whether or not they will raise the Fed�s target interest rate. Markets are moderately obsessed with this decision because it�s likely to have an impact on the value of the US dollar and most types of investments (yes, even globally). It appears that Friday�s data didn�t make the chances of an interest rate hike, in either September or later this year, materially more or less likely � which fits the narrative that it was �middle-of-the-road� type data.