#MacroFriday: United States Non-Farm Payrolls

I write this MacroFriday just after the highly anticipated August Non-Farm Payrolls. July’s release signaled weak job creation at 73.000, but it was the hefty –258.000 in downward revisions to prior months that really stood out. The three-month average slipped to just 35,000 jobs per month, which was the lowest since 2010 (excluding the volatile 2020 period). For August, economists penciled in a modest 75.000 gain. Yet again, U.S. job creation disappointed, with only 22.000 jobs added that month. Job losses were broad across both the private sector and government, gains in private education & health services and in leisure & hospitality kept the jobs report positive.

 In early August, the release of the soft labor data sent a shockwave through markets, which swiftly priced in several Federal Reserve rate cuts in the coming quarters. More surprisingly, the large revisions prompted President Trump to fire BLS Commissioner McEntarfer, raising concers over institutional independence in the US. Recently, at Jackson Hole, Fed Chair Jerome Powell said the labor market remains near maximum employment, but acknowledged that hiring has clearly slowed. This week’s JOLTS report reinforced the picture: job openings fell to 7.1 million, slipping below the number of unemployed (7.4 million) for the first time since 2017 outside the pandemic shock.

 Despite tariff-driven upside risks to U.S. inflation, markets appear more focused on U.S. labor-market weakness and are already pricing in three rate cuts in 2025.