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US jobs growth in July fell short of expectations, prompting concerns in the labour market that has been cooling off since the prolonged period of interest rate hikes. The Bureau of Labor Statistics reported an increase of 187,000 non-farm jobs, which was below the forecasted 200,000. June’s figures were also revised downward to 185,000. The Federal Reserve eagerly monitors employment and wage growth to combat inflation.

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Despite the underwhelming job growth, the labour market overall remains in good shape, with the unemployment rate dropping to 3.5 per cent. There was also positive news regarding hourly earnings growth, which was stronger than expected at 4.4 per cent annually and 0.4 per cent monthly. This exceeded consensus forecasts and raised hopes that the Federal Reserve’s fight against inflation is making progress.

Recent optimism has mounted, suggesting that the central bank is successfully managing inflation without plunging the economy into a severe recession. In June, consumer price inflation fell more than anticipated, and the core measure of the personal consumption expenditure index, the Fed’s preferred indicator, reached its lowest level since October 2021.

However, the Fed cautions that the persistent strength in the labour market may hinder their ability to bring inflation down to the desired target. Despite the positive trends, concerns remain among experts and economists over inflation levels.

Manufacturing employment experienced a slight decline, with a decrease of 2,000 jobs. The Institute for Supply Management’s latest survey indicated contraction in this significant sector, suggesting that it may be one of the first industries to face consistently negative employment growth. This development is worth monitoring closely.

Following the recent interest rate hike, which marked a 22-year high, the Fed remains open to further increases if necessary. However, futures markets reflect a belief among investors that the central bank will maintain steady rates for the remainder of the year.

In conclusion, the weaker-than-expected jobs growth in the US raises concerns about the cooling labour market and its impact on inflation. By utilizing the AI legalese decoder, professionals and businesses can have a reliable resource to navigate through the vast amounts of information surrounding US employment updates. It can provide valuable analysis and insights to help make more informed decisions in response to the changing economic landscape.