Investors were hoping for more of a ‘Goldilocks’ US non-farm payrolls report last week – neither too hot nor too cold, showing moderate growth in hiring – but what they got on 5 September was worse than expected.

The US job market slowed over the summer, adding just 22,000 jobs in August – a significant decrease from July’s 79,000 - as employers digested the fallout from Trump’s tariffs.

The report showed the unemployment rate at 4.3% and the number of unemployed people at 7.4 million - the highest figure since October 2021, although only a slight increase from the previous month, and more than the total number of jobs advertised according to the August JOLTS data.

The goods-producing sector performed poorly, shedding 25,000 jobs, and hiring in the services sector slowed from 85,000 to 63,000, but there was a glimmer of hope from the healthcare sector, which added 31,000 jobs last month.

Christian Scherrmann, chief US economist at German asset management firm DWS, said: ‘Overall, the report supports the idea labour markets may be moving away from full employment equilibrium, implying a risk of accelerating unemployment rates in the future.

‘While the recent figures will likely secure a 25-bps (basis-point) rate cut at the upcoming September FOMC (Federal Open Market Committee) meeting, the discrepancy between hiring and employment data, as well as upside risks to inflation, suggests that a balanced, data-dependent approach is more likely than any pre-commitment to setting monetary policy on autopilot.’

Markets are pricing in a 90% chance of a 25-bp (basis-point) rate cut on 16-17 September and a 10% probability of a larger 50-bp reduction, according to the CME’s Fedwatch tool.

Global markets didn’t react kindly to the latest US jobs data sparking recessionary fears for the world’s largest economy.

The gold price hit yet another record high on 8 September at $3,600 per ounce, with the dollar remaining under pressure, although on the plus side 30-year yields were lower after hitting record highs of late.

All eyes will be on the US economy once again with the release of the US August CPI (consumer price index) data on 11 September.

Investors will focus on signals from the inflation data about the prospects of interest rate cuts and fallout from tariffs on prices which could spell more ‘doom and gloom’ for the US economy.

Only a CPI number that comes in ‘egregiously higher’ than estimates could dent assumptions of imminent monetary policy easing, said Art Hogan, chief market strategist at B Riley Wealth.

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