US jobs data sent investors two sharply different signals. Initial weakness in the labour market prompted concern about a wider slowdown, while falling expectations for Federal Reserve rate increases also lifted technology shares.
In July 2024, nonfarm payrolls initially rose by 114,000, well below expectations of around 176,000. Later data showed a loss of 10,000 jobs in July.
The revisions extended beyond July. Employment in July and August combined was 60,000 lower than previously reported, while August payrolls were cut from 162,000 to 133,000.
Unemployment rose to 4.3% from 4.1% in July, and annual wage growth slowed to 3.6%. The July report strengthened expectations that the Federal Reserve would cut interest rates.
Equities sold off after the report as investors grew more worried that the labour-market decline could point to a broader economic slowdown. Yet a weak jobs report also coincided with gains for major share indexes: the Nasdaq Composite climbed 1.19% and briefly hit a record high, the S&P 500 advanced 0.73%, and the Dow Jones Industrial Average gained 0.49%.
Technology stocks tend to benefit especially when expectations of further Federal Reserve rate increases fall.
The weaker pattern continued into September, when the United States added only 29,000 jobs, far below expectations. Annual wage growth came down to 3.0%, while the unemployment rate for people who are Black jumped to 7.0 percent.
Companies were hiring slowly, though they were not firing workers aggressively. The September jobs report reduced expectations that the Federal Reserve would raise interest rates again in October.
The figures leave open whether the weakness reflects a short pause in hiring or a more sustained deterioration. They also leave the scale of any effect on future Federal Reserve decisions uncertain.
Comments (0)