The U.S. Bureau of Labor Statistics released its August employment report on Friday showing a clear slowdown in hiring momentum across the economy.

Employers added only 22,000 jobs during the month, a figure well below the average monthly increase recorded in the first half of the year , June data was also revised lower, reinforcing the weaker picture of labor market momentum.

At the same time the unemployment rate rose to 4.3%, marking its highest level in several years nad this increase highlights mounting pressure on the economy’s ability to generate new jobs at a sustainable pace and raises questions about the durability of current growth. Meanwhile, average hourly earnings recorded only a modest uptick, with wage growth not strong enough to signal significant inflationary pressures, further complicating the Federal Reserve’s policy outlook.

The release of these figures prompted markets to raise expectations for a rate cut at the upcoming Federal Reserve meeting scheduled for September 16–17. Futures markets now suggest investors see a high probability of a quarter-point cut, with growing bets on the possibility of additional easing before the end of the year if labor market weakness continues to surface in the coming months.

Financial markets reacted swiftly to the data. Gold prices advanced toward their record highs, supported by lower bond yields and the prospect of looser monetary policy, while U.S. Treasuries saw strong demand that drove yields lower. U.S. equities ended mixed: some liquidity-sensitive sectors benefited from the prospect of easier policy, while concerns over slowing growth weighed on others.

Investor attention is now turning to upcoming economic releases, particularly inflation reports such as the Consumer Price Index and Producer Price Index, which are expected to provide further signals on the likely path of interest rates. The outcome of these reports will play a pivotal role in determining whether the Fed limits itself to a modest cut in September or embarks on a deeper easing cycle over the remainder of 2025.

Weak U.S. Job Growth Boosts Expectations of a September Rate Cut

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