The nation’s economy continues to underperform expectations. The Bureau of Labor Statistics reports the economy created 142,000 jobs in August, significantly less than the consensus estimate of 162,000.
In addition, the number of jobs created in June and July was revised downward, suggesting the economy has begun to hit the brakes. The unemployment rate in August remained at 4.2%.
Construction workers were once again the most likely to find employment last month. Construction employment rose by 34,000 in August, higher than the average monthly gain of 19,000 over the prior 12 months.
Over the month, heavy and civil engineering construction added 14,000 jobs, and employment in nonresidential specialty trade contractors continued to trend up by 14,000 jobs.
People in the healthcare industry also found their services were needed. Health care added 31,000 jobs in August, about half the average monthly gain of 60,000 over the prior 12 months.
But August was not a good month for factory workers. Employment in manufacturing edged down in August by 24,000 jobs, with workers making durable goods taking the biggest hit. Most other categories saw little change in job creation last month.
What it means for interest rates
The jobs data all but guarantee the Federal Reserve will cut interest rates later this month for the first time in four years. The federal funds rate does not directly affect mortgage rates but it does for other consumers loans.
For example, a cut in the federal funds rate would lower the interest rate on car loans and credit card debt, which is currently at a record high.
Wall Street did not like the report, selling off in pre-market trading after the report was released. Meanwhile, bond yields retreated on the news, which may be good news for homebuyers. A lower yield on the 10-year Treasury bond usually translates into lower mortgage rates.