Economists expect a modest 75,000 jobs added in August, with unemployment ticking up to 4.3%.
Recent jobs data including downward revisions for May and June point to a weakening labour market.
Markets now price in a 95% chance of Fed rate cut this month, with the jobs report likely to seal the case.
All Eyes on August Jobs Report as US Labour Market Shows Signs of Strain
Investors are on the watchout for August's jobs data closely, with expectations of a Fed rate cut in September now almost fully priced in
US jobs data for August is due later today
Summary
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After months of steady resilience, America’s labour market has begun showing signs of a slowdown. The Bureau of Labor Statistics (BLS) is slated to release its much-anticipated August employment report later in the day, with investors across the globe bracing for another weak set of numbers that could cement expectations of an interest rate cut from the Federal Reserve later this month.
Forecasts suggest the US economy added just 75,000 jobs in August, while the unemployment rate is expected to edge up to 4.3%, according to Bloomberg data. Average hourly earnings are tipped to rise 0.3% from July and 3.7% on the year, pointing towards some ongoing wage pressure even as job creation moderates.
Another set of weak jobs data is expected to fire up hopes of an immediate rate cut by the Fed when it next meets on September 16-18. In July, the US economy created 73,000 jobs, but that headline was overshadowed by hefty downward revisions to earlier data. Payroll gains in May and June were trimmed by a combined 258,000, erasing much of the momentum previously thought to have been in place.
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The revisions prompted an intervention from President Trump, who fired BLS Commissioner Erika McEntarfer, accusing her, without evidence, of fabricating data. Since then, he has nominated EJ Antoni, chief economist at the Heritage Foundation, to lead the agency.
Adding to the downbeat tone, private payroll provider ADP reported last night that just 54,000 jobs were created in the private sector last month. Meanwhile, weekly jobless claims climbed to 237,000, the highest since June. The Labour Department also confirmed this week that in July, the number of unemployed Americans exceeded job vacancies for the first time since the Covid-19 pandemic.
Accordingly, traders are now pricing in a more than 95% chance of a Fed rate cut in September, according to CME Fedwatch data. Investors will be eyeing the jobs data release not just for the headline payroll number, but also for revisions to June and July. The weak bias in initial August readings, often followed by stronger revision, adds another layer of uncertainty.
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Economists see the slowdown as structural as well as cyclical. Tariffs imposed by the Trump administration have weighed on business confidence, while tougher immigration policies are shrinking the pool of available workers.
If the jobs report confirms another month of anaemic job addition and a rise in unemployment, it will strengthen calls for a Fed rate cut.
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