Back to the main topic, the report from the US Bureau of Labor Statistics on Friday showed that non-farm employment in August only increased by 22,000, far below the market expectation of 75,000. The unemployment rate has also risen to 4.3%, the highest level since the end of 2021. Although the average hourly wage growth was in line with market expectations, the data for the previous two months was revised down by 21,000, especially in June, which surprisingly shifted from an increase to a decrease of 13,000. This was the first time since December 2020.
As soon as the data came out, the price of gold soared all the way, almost hitting 3590 dollars. Meanwhile, the US dollar index fell in response. Over the past three months, the average monthly increase in jobs in the United States was only 29,000, which is the worst job growth performance since the pandemic.
The employment report from July has already shown that the number of jobs created in May and June was 258,000 less than estimated. At that time, Trump fired the head of the Bureau of Labor Statistics, accusing her of manipulating the data.
Before the report comes out on Friday, ADP's data shows that the private sector added 54,000 jobs last month, while the Labor Department's data indicates that the number of initial claims for unemployment benefits reached 237,000 last week, the highest level since June. It seems that the job market is indeed not optimistic.
From an industry perspective, education and healthcare services are the main drivers of job growth, while the durable goods and business services sectors have suffered significant losses. These data will undoubtedly intensify concerns about the durability of the job market. In recent months, U.S. job growth has noticeably slowed, job vacancies have decreased, and wage growth has also slowed, putting considerable pressure on the economy.
Futures traders are now betting that the Federal Reserve will begin to cut interest rates rapidly and consecutively starting this month. Federal Reserve Chairman Powell has already signaled a rate cut, and policymakers will see the latest CPI data before the meeting this month. Some experts say that the job market has shown signs of weakness, and the Federal Reserve will definitely start cutting rates this month, with a series of rate cuts to follow.
Regarding the market reaction, some strategists say that stock market investors may be excited by the Federal Reserve's dovish stance, but if the decline in yields really signals a significant slowdown in economic growth, that would not be good news for the stock market. Overall, the situation in the U.S. job market is truly worrisome.
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