The US labor market is showing signs of slowing down, raising questions about the future of the economy and the potential for Federal Reserve rate cuts. This week's figures have already painted a weaker-than-expected picture, and the Bureau of Labor Statistics (BLS) August jobs report, released Friday morning, is expected to confirm this trend.
Key Expectations for the August Jobs Report
Economists anticipate the US economy added approximately 75,000 jobs in August. Bloomberg data suggests a potential rise in the unemployment rate to 4.3%. Hourly earnings are projected to have increased by 0.3% compared to the previous month, and 3.7% year-over-year.
July's Report: A Sign of Things to Come?
In July, the economy saw the creation of 73,000 new jobs. However, the primary takeaway from that report was the significant revision of job gains for May and June, resulting in the elimination of roughly 258,000 previously reported gains. This revision sparked controversy, leading to President Trump's removal of Erika McEntarfer, the head of the BLS. He subsequently nominated EJ Antoni, the chief economist at the Heritage Foundation, for the position.
Eric Teal, chief investment officer of Comerica Wealth Management, commented on the situation, stating, "We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows." He added, "The silver-lining is the weaker the jobs data the more cover there is for stimulative interest rate cuts that are on the horizon."
Recent Data Adds to the Concerns
Adding to the concerns, data released Thursday from ADP, a private payroll provider, revealed the creation of only 54,000 private sector jobs last month. Furthermore, the Labor Department reported 237,000 initial filings for unemployment insurance last week, the highest figure since June.