US adds 142,000 jobs in August, unemployment at 4.2pc

The US added 142,000 nonfarm jobs in August, fewer than forecast, raising the odds of a half-point rate cut at the Federal Reserve's policy meeting in two weeks.

The job gains followed downwardly revised gains of 118,000 for June and 89,000 for July, for combined losses of 86,000 for the two prior months, according to the Labor Department. The gains in August were below the average monthly gain of 202,000 for the prior 12 months.

The unemployment rate ticked down to 4.2pc in August from 4.3pc in July, still near five-decade lows of 3.4pc reached in early 2023.

The gains were slightly lower than the 160,000 job gains forecast in a survey by Trading Economics, increasing the odds of a 50 basis point cut in the target rate to 45pc probability today from 40pc Thursday, according to the CME FedWatch tool. Odds of a quarter point cut fell to 55pc today from 60pc the day prior.

Fed policy makers in late July kept their target rate unchanged at a 23-year high, but Fed chair Jerome Powell told a bankers symposium last month that the "time has come for policy to adjust," his clearest signal that the Fed is ready to begin lowering borrowing costs as inflation has slowed markedly and the labor market was beginning to show signs of weakening. A rate cut after the 18 September Fed meeting would come less than two months before the US presidential election on 5 November.

Job gains were reported in construction and health care. Health care added 31,000 jobs in August, about half the monthly gain in the prior year. Construction added 34,000 jobs, more than the average.

Manufacturing jobs fell by 24,000 in August. Employment was little changed in other major industries, including mining and oil and gas extraction.

Average hourly earnings increased by 3.8pc over the 12 months ending in August, up from 3.6pc through July.

By Bob Willis