The US added just 22,000 jobs in August — far below Wall Street’s forecast of 75,000.
June’s figures were also revised down to a net loss of 13,000 jobs, underscoring signs of a slowing labor market.
The report triggered a turbulent day on Wall Street. Stocks initially plunged at 8.30am as the report dropped, rebounded minutes later, but then went red again just after 10pm and carried on falling — and then surged once more just after 11am.
The weak labor market has heightened expectations that the Federal Reserve will cut its benchmark interest rate — with some speculating a larger 0.5 percent reduction at the September 17 meeting instead of the usual 0.25 percent change.
Fed chair Jerome Powell recently hinted that the central bank’s concern over the labor market could lead to a rate cut at its next meeting on September 17.
That expectation of a big rate cut pushed US Treasury prices higher, sending yields down, while gold — which benefits when rates fall because it pays no interest — jumped to a record high.
The Bureau of Labor Statistics report marked a significant slowdown from July, which saw 79,000 jobs added.
One of the key factors for August’s poor numbers was a 15,000 reduction in federal government jobs following Elon Musk’s firing spree.
The shocking report revised down June’s figures to a net loss of 13,000
Wholesale trade and manufacturing also saw 12,000 less jobs for the month.
‘US non-farm payrolls for August came in below expectations, and with job growth slowing, the Fed is likely to cut the US base interest rate when FOMC members next meet on 16-17 September,’ Daniel Casali, chief investment strategist at Evelyn Partners said following the report.
‘The weakening picture of the labor market painted by the August jobs data along with other recent labor market statistics all but ensure a rate cut at the FOMC meeting later this month,’ Nancy Vanden Houten, lead US economist at Oxford Economics agreed.
Friday’s report marks the first since President Donald Trump sensationally fired the US Bureau of Labor Statistics commissioner, Erika McEntarfer, after the release of the July jobs report.
The President claimed, without evidence, that the weak numbers for the month were ‘phony.’
He also accused Biden-appointed McEntarfer of ‘faking’ jobs numbers before the 2024 election to ‘try and boost Kamala’s chances of victory.’
The White House has now nominated E.J. Antoni, a chief economist at the conservative Heritage Foundation, to replace McEntarfer.
But some economists have sounded the alarm about Trump’s pick, claiming that his work at Heritage has frequently included mistakes.
This is a breaking news story. Updates to come.
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First jobs report since Trump fired stats boss sends Wall Street on a wild ride