August Non-Farm Payrolls in the United States "Unexpectedly Plummet," Cementing Expectations for a Fed Rate Cut in September

The job growth in the United States for August has significantly cooled down, with the unemployment rate rising to the highest level since 2021, sparking concerns about a possible further deterioration in the labor market. A report released by the US Bureau of Labor Statistics on Friday showed that the non-farm payroll employment increased by 22,000 in August, while economists had expected an increase of 75,000. Revised data showed a decrease in employment in June, the first decline in employment numbers since 2020. The unemployment rate also rose to 4.3%. These data are likely to exacerbate concerns about the job market, as the July report had already exposed many issues. In recent months, job growth has slowed significantly, job vacancies have decreased, and wage growth has also slowed, putting pressure on overall economic activity. Job growth was concentrated in healthcare, leisure, and hospitality sectors. Employment in industries such as information, financial activities, manufacturing, federal government, and business services all saw significant declines. Although there were reports earlier on Friday of a "technical glitch" at the US Bureau of Labor Statistics, the related data was still published as scheduled at 8:30 am Washington time. Following the release of the report, US stock index futures and US Treasury bonds both saw an increase. While the non-farm employment data for July was slightly revised upward, the employment situation in June was worse. The July non-farm employment report had caused global market turmoil, with only 73,000 new jobs added, far below expectations. What shocked the market even more was the significant downward revision of 258,000 jobs in May and June, the largest downward revision since 2020. This led to the dismissal of the Commissioner of the US Bureau of Labor Statistics by former President Donald Trump. Trump nominated conservative think tank Heritage Foundation economist E.J. Anthony as the Commissioner of the US Bureau of Labor Statistics, but this appointment still needs to be approved by the Senate. Based on the revised data from this report, the average job growth over the past three months was only 29,000. Employment positions have been below 100,000 for four consecutive months, marking the weakest job growth period since the pandemic. The weaker-than-expected jobs report boosted expectations for a rate cut by the Federal Reserve in September, with S&P 500 index futures edging slightly higher. Kevin Brocks, head of 22V Research, stated, "Although the unemployment rate remains steady, the private sector employment data fell short of expectations. This is enough to provide a basis for further relaxation of the financial environment, but not enough to suggest that the risk of economic recession is imminent. Rate-sensitive stocks and risk appetite stocks will continue to rise." The yield on the US two-year Treasury note, which is most sensitive to changes in monetary policy, briefly fell by 8 basis points to 3.5%, while the yield on the 10-year Treasury note dropped by over 6 basis points to 4.1%. Both reached five-month lows. Interest rate futures trading indicates that traders expect a 98% likelihood of a 25 basis point rate cut by the Federal Reserve at the meeting on September 17. It is estimated that in the next 12 months, the Federal Reserve will cut rates by a total of 142 basis points.