Since US Federal Reserve chairman Jerome Powell stated last month that the time for interest rates to begin coming down and the pace would depend on economic data, investors have been keenly awaiting the latest jobs numbers.
Dismal July job figures caused markets to panic last month.
Another big miss for August would have solidified perceptions that the US economy is slowing more sharply than initially thought and that the Fed had waited too long to begin cutting interest rates.
Government data showed on Friday that the world’s biggest economy added 142,000 jobs last month, an increase from July’s figure which was revised notably lower to 89,000.
But it was below economists’ expectations of 165,000, according to a Briefing.com consensus forecast.
The unemployment rate, meanwhile, declined slightly from 4.3% to 4.2%.
“The key takeaway from the report is that it was not as good as hoped, but it also wasn’t as bad as feared,” said Briefing.com analyst Patrick O’Hare.
Jakob Westh Christensen, market analyst at eToro trading platform, said the figures should ease recession concerns.
“With what looks like an economy that continues to chug along for now, investors still have hope that the Fed can still orchestrate a soft landing of the economy – by avoiding a recession while bringing down inflation,” he said.
O’Hare said the latest jobs report “will keep the Fed on track for a rate cut” at its Sept 17-18 meeting, with the latest data raising expectations of a 50-basis-point reduction.
Mahmoud Alkudsi, senior market analyst at ADSS brokerage, said the jobs report reduced uncertainty about the size of the rate cut.
“A 50-basis point cut is firmly on the table to support a jobs market that has shown fragility for consecutive months,” he said.
Traders have factored in 100 basis points, or one percentage point, worth of reductions before the end of 2024.
Wall Street stocks, which had been firmly lower in futures trading before the jobs data, opened slightly higher before splitting in different directions.
European stocks were also mixed in afternoon deals.
The jobs data, known as the non-farm payrolls report, sent the dollar briefly lower.
Tokyo’s stock market was weighed down on Friday by a strong yen, which has picked up against the dollar on bets of a Fed rate-cut and growing expectations that the Bank of Japan would continue hiking its own borrowing costs.
Hong Kong’s stock market shut on Friday owing to a typhoon.
Oil prices rose after eight Opec+ nations announced on Wednesday that they will extend voluntary production cuts for two months. Weak demand as the US and Chinese economies struggle has caused crude prices to drop to their lowest levels of the year.
Key figures around 1405 GMT
New York – Dow: UP 0.1% at 40,788.77 points
New York – S&P 500: DOWN 0.4% at 5,481.36
New York – Nasdaq Composite: DOWN 0.8% at 16,985.62
London – FTSE 100: DOWN 0.1% at 8,229.78
Paris – CAC 40: FLAT at 7,433.16
Frankfurt – DAX: DOWN 0.4% at 18,508.39
Tokyo – Nikkei 225: DOWN 0.7% at 36,391.47 (close)
Hong Kong – Hang Seng Index: (closed)
Shanghai – Composite: DOWN 0.8% at 2,765.81 (close)
Dollar/yen: DOWN at 143.34 yen from 143.42 yen on Thursday
Euro/dollar: DOWN at US$1.1078 from US$1.1110
Pound/dollar: DOWN at US$1.3163 from US$1.3180
Euro/pound: DOWN at £0.8416 from £0.8429
Brent North Sea Crude: UP 1.1% at US$73.46 per barrel
West Texas Intermediate: UP 1.1% at US$70.10 per barrel