Unemployment in the US is growing stronger than expected: stocks are going up, and the dollar is going down

The US labor market data released today showed that the unemployment rate in the country rose from 3.5% in July to 3.8% in August. This is the highest unemployment rate since February 2022. The latest data exceeded the forecasts of analysts who expected unemployment to remain at 3.5%. 

The number of unemployed increased by 514 thousand to 6.355 million, and the employment rate increased by 222 thousand to 161.484 million.

Key points of the Non-Farm Payrolls report: 

• The number of jobs in the non-agricultural sector increased by 187 thousand, faster than analysts expected (by 170 thousand).

• In the private sector, growth was at the level of 179 thousand jobs (consensus forecast: 150 thousand).

• The average hourly wage rate m/m increased by 0.2% (consensus forecast: +0.3%). On an annualized basis, the growth rate came out at 4.3%, analysts expected 4.4%.

The publication of fresh data caused the S&P 500 futures to rise by 0.2%, while the dollar index declined by 0.3%. 

The weakening of the labor market may be favorable for the policy of the US Federal Reserve System (FRS) in the fight against inflation. With the current dynamics of unemployment, the Fed may not feel the need to raise interest rates further. This may also be favorable for stocks, but at the same time have a negative impact on the US currency.