NFP payrolls came in at 187K (Bloomberg consensus 170K) and average hourly earnings rose 4.3% YoY (consensus 4.4%). Combining data through June and preliminary benchmark revisions, we see a cooling in the labor market.
figure 1: August nonfarm payrolls (black bold), July data (blue), Bloomberg consensus assuming no revisions to July data (light blue squares), Philly Fed state early benchmark sum (pink line), BLS Preliminary benchmarks (red squares). Sources: BLS via FRED, BLS (8/23/2023), Philadelphia Fed, and authors’ calculations.
As a result, the market’s implied path for the federal funds rate has declined over the past week.
figure 2: Effective Fed Funds Rate (bold black), CME implied Fed funds as of 8/1 (light green triangle), as of 8/25 (light blue triangle), as of 8/31 (orange square), as of 9/1 pm 1 Point center (red square). Source: Federal Reserve Board via FRED, continuing medical education and the author’s calculations.
