US non-farm payroll figures dropped significantly in August, indicating a slowdown in the economy. Contrary to expectations of 78,000 new jobs, only 22,000 were added. The previous month’s data showed a mixed trend, with July’s figures being revised upward to 79,000, while June’s numbers were decreased to 13,000. The unemployment rate rose to 4.3 percent from 4.2 percent.

This situation is concerning, especially as inflation is decreasing at a slow rate, but deteriorating labour market conditions are harmful to the economy.

Such disappointing job growth nearly assures a 0.25 percent interest rate cut during the Federal Open Market Committee (FOMC) meeting on September 16-17, though some economists anticipate even a larger 0.50 percent drop in US interest rates.

However, given the worsening job market, the Fed’s focus will likely be on stabilizing employment conditions. The Bureau of Labor Statistics JOLTS report has indicated that, since April 2021, the ratio of job vacancies to unemployed individuals fell below 1, reaching 0.99 in July.

Earlier this month at the Jackson Hole symposium, Fed Chairman Jerome Powell suggested that the balance of risks may be changing, potentially leading to a shift in monetary policy.

For market participants, the........

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