The following is MBA SVP and Chief Economist Mike Fratantoni’sreaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in August.

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“The August employment report confirmed that the job market is cooling. With a 142,000 increase in August and downward revisions of the June and July numbers, job growth has slowed to an average 116,000 over the past three months. That is likely not enough to keep the unemployment rate from rising further. It was little changed at 4.2% in August, but we do expect it will increase over the next year, perhaps as getting as high as 5%.

"There were job losses in the manufacturing sector in August but relatively modest job gains in the services sector. This is consistent with a cooling of demand or workers from companies across the board. The JOLTS report this week added to this picture with data showing an ongoing decline in job openings. Average hourly earnings picked up last month to a 3.8% annual change from 3.6% in July.

“Federal Reserve officials have recently pivoted from a primary focus on inflation to a more balanced view, with concerns both about inflation and employment. This report highlights that such a pivot makes sense, and that a 25-basis-point cut at its September meeting is a sensible first step at this time.”