US August Nonfarm Payrolls Plummet, June Revised Down to Negative! Gold Hits New All-Time High

U.S. employment growth slowed significantly in August, and the unemployment rate rose, raising concerns that the labor market may be on the verge of a more serious deterioration.

The report released by the U.S. Bureau of Labor Statistics on Friday showed that non-farm payrolls increased by only 22,000 in August, far below the market forecast of 75,000; the unemployment rate rose slightly to 4.3%, the highest level since the end of 2021.

In August, average hourly earnings rose by 0.3% from the previous month and by 3.7% year-on-year, in line with market expectations.

Most notably, the data for the previous two months was revised downward by a total of 21,000. The Bureau of Labor Statistics pointed out that the number of new non-farm jobs in June was revised down by 27,000 from 14,000 to -13,000, marking the first such decline since December 2020; the number of new non-farm jobs in July was revised up by 6,000 from 73,000 to 79,000.

After the data was released, gold continued to hit new all-time highs, once approaching the $3,590 mark; the U.S. dollar index fell more than 25 points in the short term.

After revisions, U.S. employment growth has averaged only 29,000 over the past three months. The number of jobs added has been below 100,000 for four consecutive months, continuing the weakest employment growth trend since the pandemic.

Earlier, the July employment report showed that 258,000 fewer jobs were created in May and June than previously estimated. U.S. President Trump even fired the head of the Bureau of Labor Statistics and accused her of manipulating data for political gain.

Before Friday's report, private employment service provider ADP released data on Thursday showing that the private sector added 54,000 jobs last month, and data from the Department of Labor showed that initial jobless claims last week were 237,000, the highest since June.

By industry, the non-farm report showed that education and health services were the biggest job creators, adding 46,000 employees in the month. The hardest hit were the durable goods and business services sectors, which lost 19,000 and 17,000 jobs respectively in August.

These latest labor market data may intensify concerns about the sustainability of the job market. In recent months, U.S. employment growth has slowed sharply, job vacancies have decreased, and wage growth has slowed, all of which have put pressure on broader economic activity.

Futures traders have increased their bets that the Federal Reserve will begin a rapid series of rate cuts starting this month, continuing to bet that the Fed will cut rates at its September meeting. Fed Chair Powell signaled a rate cut in his speech at the Fed's annual Jackson Hole symposium last month, and policymakers will also see the latest CPI data before this month's meeting.

Gregory Faranello, Head of U.S. Rates Trading and Strategy at AmeriVet Securities, said, "The labor market has shown weakness, and the transition of employment growth from the public sector to the private sector will require lower rates. The Fed will begin cutting rates this month, and we expect a series of further cuts to follow. The forward curve shows that rates will fall to neutral levels by the end of 2026, but this timeline is likely to be brought forward."

Regarding the market reaction, Matt Maley, Chief Market Strategist at financial firm Miller Tabak, said: "Usually, stock market investors get excited about the prospect of a more dovish Fed. That is indeed likely to be the initial reaction. However, history tells us that if falling yields signal a significant slowdown in economic growth, it is actually bearish for the stock market."