News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
Even amid the heat of summer, the national jobs report for July is giving some folks the chills.
The US economy added 114,000 jobs and the unemployment rate ticked up to 4.3% last month, up from 4.1% in June, the Bureau of Labor Statistics reported.
July’s unemployment rate was the highest it’s been since October 2021, when it came in at 4.5%, according to BLS data. The expectation was that unemployment would remain at 4.1%, according to CNN. Job creation was also 35% below expectations, the Associated Press reported.
CNN reported that the latest jobs report “painted a picture of a significantly weaker job market and raised some fears of a pending recession.”
Investors showed pessimism in response to the Friday jobs report. According to the Wall Street Journal, “stocks fell sharply after the data came out, reflecting investors’ renewed worries about an economic slowdown.” Stephen Brown, deputy chief North America economist of Capital Economics, wrote in a client note that a soft economic landing was now “in doubt.”
“The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with a 50 bp cut or even an intra-meeting move,” Brown wrote.
Justin Purohit, an analyst at Seeking Alpha, wrote that while “it would be reasonable to question” if the Fed is dragging its feet too much and risking the soft landing it’s aiming for, the July jobs number wasn’t enough for him to “make that conclusion.”
“However, I do believe the softer-than-expected reading does increase the chances of additional rate cuts in the final two months of the year,” he added.
Federal Reserve Chair Jerome Powell said at the Fed’s meeting this week that a rate cut “could be on the table” in September.
“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point,” Powell said.