Prior to today's employment report release, market consensus held that new job additions in the range of 40,000 to 100,000 would align with market pricing and give the Federal Reserve a "green light" for a 25 basis point rate cut in two weeks. Only when employment data showed significant anomalies would the Fed potentially opt for a 50 basis point cut... or no cut at all. However, the August data released by the Bureau of Labor Statistics (BLS) delivered a significantly anomalous result: the US added only 22,000 jobs in August, marking a sharp decline from the upwardly revised July figure (adjusted from an initial 73,000 to 79,000).
More importantly, June employment data was revised downward from 27,000 to -13,000, marking the first negative job growth in the US since 2020.
Following these revisions, the combined job totals for June and July decreased by 21,000 compared to previously published figures, with this negative revision trend continuing and further highlighting labor market deceleration.
After revisions, the three-month average of new job additions fell to 29,000, though this represents a slight improvement from July's 28,000.
Equally significant, this non-farm payroll figure fell well short of Wall Street's expectation of 75,000. In fact, among 80 analyst forecasts collected by Bloomberg, only one prediction was below the actual figure.
Household survey data painted a less dire picture: employment actually increased by 288,000 people to 163.394 million, representing the largest gain since April this year.
The number of unemployed also rose, from 7.236 million to 7.384 million, while the labor force expanded to 170.778 million, pushing the unemployment rate from 4.2% to 4.3%, in line with expectations. Among major demographic groups, Black unemployment rose to 7.5%, the highest since 2021, while all other groups also saw modest increases: White (3.7%), Asian (3.6%), and Hispanic (5.3%).