NFP employment is at 187K (vs. Bloomberg consensus 170K), while average hourly earnings y/y up 4.3% (vs. consensus 4.4%). Combined with to June figures and preliminary benchmark revision, we have a picture of a cooler labor market.

Figure 1: Nonfarm payroll employment August release (bold black), July release (blue), Bloomberg consensus assuming no revisions to July series (light blue square), Philadelphia Fed early benchmark sum of states (pink line), BLS preliminary benchmark (red square). Source: BLS via FRED, BLS (8/23/2023), Philadelphia Fed, and author’s calculations.

Consequently, the market’s implied path for the Fed funds rate has dropped over the past week.

Figure 2: Effective Fed funds rate (bold black), CME implied Fed funds as of 8/1 (light green triangle), as of 8/25 (light blue triangle), as of 8/31 (orange square), as of 9/1 1PM central (red square). Source: Fed Board via FRED, CME and author’s calculations.

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