The US labor market is experiencing noticeable deceleration, evidenced by a series of disappointing job market statistics released this week. Anticipation builds for the Bureau of Labor Statistics (BLS), which is scheduled to release the August jobs report on Friday at 8:30 a.m. ET. Analysts expect this report to mirror the prevailing trends reflected across the broader US economy.
Economists project that the US economy added approximately 75,000 jobs in August, alongside a rise in the unemployment rate to 4.3%, as reported by Bloomberg. Additionally, hourly earnings are expected to have increased by 0.3% month-over-month and by 3.7% year-over-year.
In the prior month, July, the economy added 73,000 new positions. However, a significant highlight from that report was a revision of job gains in May and June, resulting in a correction that erased about 258,000 previously reported job additions. In response to these figures, President Trump took the controversial step of dismissing BLS chief Erika McEntarfer and has since nominated EJ Antoni, the chief economist at the Heritage Foundation, to succeed her.
Separately, Eric Teal, chief investment officer of Comerica Wealth Management, noted that ongoing uncertainties surrounding tariff policies, recent changes to immigration regulations, and the increasing adoption of artificial intelligence are contributing to a growing softness in the labor market. Teal remarked that the weaker jobs data could provide justification for anticipated interest rate cuts aimed at stimulating the economy.
In parallel to the upcoming BLS report, data from private payroll provider ADP indicated that just 54,000 private sector jobs were created in the last month. Additionally, the Labor Department reported that new unemployment insurance claims reached 237,000 last week, marking the highest level since June.
These labor statistics will be closely monitored as the Federal Reserve signals an increasing likelihood of a rate cut in September following a prolonged period of relative inaction. As of Thursday morning, traders were pricing in more than a 95% probability of a rate cut, according to data from the CME Group.
Jordan Rizzuto, managing partner and chief investment officer at GammaRoad Capital Partners, asserted that the trends observed in ADP payrolls, weekly unemployment claims, and the Job Openings and Labor Turnover Survey (JOLTS) collectively paint a picture of a labor market in marginal decline. He emphasized that this further bolsters market expectations regarding an imminent rate cut in light of recent comments from Fed Chair Jerome Powell at the Jackson Hole symposium, which highlighted the Fed’s focus on employment conditions.
