The dollar fell on the news of a sharp increase in the unemployment rate in the United States

On Friday, data on the US labor market was released, causing the dollar to drop.

The expected number of new jobs was exceeded slightly.

The unemployment rate, however, experienced a sharp increase, reaching its highest level in a year and a half.

The growth of average salaries was worse than anticipated.

On Friday, the US Bureau of Labor Statistics reported that US non-farm payrolls increased by 187,000 in August, surpassing the expected figure of 170,000. Nevertheless, the data from July was revised downwards by 30,000.

In August, the unemployment rate unexpectedly increased by 0.3%, bringing it to 3.8%, the highest it has been in the past year and a half. No change was anticipated.

Data on the growth of average wages, an important indicator of inflation, came out worse than forecasts. Last month, the average hourly wage rose by 0.2% compared to the previous month, which was lower than the expected +0.3% m/m.

Average wages in annual terms grew worse than expected, with a rate of +4.3%, while the data was expected to be at the same level as the previous month (+4.4% y/y).

In August, the private non-agricultural sector saw an increase of 179 thousand jobs. The public sector added 8 thousand jobs, while the industry and service sector saw increases of 36 thousand and 143 thousand jobs, respectively.

There was a significant decrease in jobs in August in the fields of cargo transportation and warehousing, temporary assistance services, and the information industry.

The number of people employed in the economy rose by 222 thousand; however, the number of unemployed skyrocketed by 514 thousand. This, combined with a drastic decrease in the labor base (by 525 thousand), caused the unemployment rate to skyrocket.

Speculation has been fueled by the employment data that the Fed may refrain from raising interest rates this year in order to avoid a recession, as reported by Bloomberg. Bank of America experts have suggested that the Fed may be pausing their rate hikes for the time being.

The probability of keeping the Fed rate at the same level at the meeting on September 19-20 increased to 93% from 88% the day before. Additionally, the probability of a rate cut in December rose to 11.1% from 4.9%, and the probability of a rate cut in January increased to 22.6% from 17.8% the day before.

It is estimated that the likelihood of a rate cut in March 2024 is close to 51%, and in May it is estimated to be nearly 75%.