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UPDATE: Decent US job growth tees Fed up for 25 bps September rate cut

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UPDATE: Decent US job growth tees Fed up for 25 bps September rate cut

August's disappointing U.S. job growth wasn't bad enough to change many people's minds about the Federal Reserve's likely actions at its forthcoming interest-rate meeting.

Total nonfarm payroll employment in the U.S. grew by 130,000 in August, compared with the Econoday consensus estimate of 163,000 additional jobs. Job gains in July were revised down to 159,000 from 164,000, while June's employment numbers were revised down to 178,000 from 193,000, data from the U.S. Bureau of Labor Statistics showed.

A good chunk of the gains came from the addition of 25,000 government workers for the 2020 census. Average hourly earnings increased by 3.2% on an annual basis in August, topping estimates of 3.1% annual growth, while the unemployment rate was unchanged at 3.7%.

While this slowing will likely cause the Fed to continue pursuing more accommodative monetary policy, the jobs gains the U.S. has seen are not recessionary, according to James Marple, senior economist at TD Bank Group.

"The indicators are all sort of pointing yellow. They're not flashing red," Marple said in an interview. "That's why we think [a 25 basis-point cut] is more likely than 50."

Traders are almost completely aligned in betting for a 25 basis point cut at the FOMC's next meeting, scheduled for Sept. 17-18, with 93.5% invested in that outcome and the remainder seeing no change from the current range of 2% to 2.25%, according to CME's FedWatch Tool.

While still solid numbers, they do serve as a warning that international trade conflicts and slowing global growth are starting to permeate an economy that is in its record 11th year of expansion.

Job growth has slowed in 2019, averaging 158,000 per month through August, compared with 223,000 per month in 2018, the BLS data showed. Manufacturing job growth has been particularly slow, averaging 6,000 jobs per month versus 22,000 per month in 2018.

Retail employment contracted by 11,000, its seventh consecutive month of declines, during which period it has lost 83,000 jobs. Mining jobs fell by 6,000, for a total drop of 12,000 in the past three months.

Bright spots included healthcare, which added 24,000 jobs, and financial services with a net gain of 15,000.

The BLS report followed the ADP National Employment Report released on Sept. 5, which showed U.S. private-sector employers added 195,000 jobs in August, the highest level seen in four months.

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