U.S. added stronger than expected 162,000 jobs in August as labor market bounced back

The U.S. labor market strengthened appreciably in August, giving the growing group of hawks at the Fed more ammunition to hike interest rates at the bank’s policy meeting in less than two weeks.

According to the government’s Nonfarm Payrolls report released Friday morning, the U.S. economy added 162,000 jobs last month. That was well above the consensus estimate of 56,000 and followed the addition of 21,000 jobs in July (revised from an originally reported decline of 23,000).

The unemployment rate came in at 4.1% versus 4.1% expected and July’s 4.1%.

Reaction in markets was swift, with bitcoin tumbling about 2% to below $80,000. The U.S. 10-year Treasury yield jumped 3.3 basis points to 4.80%. U.S. stock index futures are modestly lower.

Will they, or won’t they

Federal Reserve Chairman Kevin Warsh put a September rate hike firmly on the table one week ago today with his hawkish Jackson Hole speech.

But Fed Governor Chris Waller (with an assist from FRBNY President John Williams) this week sent markets surging by suggesting a rate hike at the bank’s policy meeting in two weeks was far from a done deal.

This morning’s jobs report is another data point in favor of the hawks, but the key figure in the Fed’s decision is likely to be next Friday’s CPI report for August.