August Job Losses Rise US, Canada Pressure Central Banks

The August jobs report revealed a significant slowdown in the U.S. labor market, with only 22,000 jobs added and the unemployment rate rising to 4.3%, signaling a loss of momentum and prompting expectations of a Federal Reserve interest rate cut in September. Prior months’ data were revised downward, showing weaker job growth than initially reported, and the long-term unemployed increased, highlighting challenges in the labor market. Wage growth rose modestly, but overall employment gains were concentrated in sectors like health care, while federal government jobs declined significantly. This weak labor market performance has fueled speculation about the Fed’s potential rate cuts, with futures traders predicting an 88% chance of a quarter-point cut and some possibility of a larger 50 basis point reduction. The report aligns with similar trends in Canada, where job losses and rising unemployment have increased pressure on the Bank of Canada to ease monetary policy. Analysts caution that the labor market is losing strength without collapsing, reflecting economic uncertainty amid trade tensions and policy impacts.