August Jobs Report Misses Mark, Boosting Odds of Fed Rate Cut
Job creation sharply slowed in August, with only 22,000 new jobs added and the unemployment rate rising to 4.3%, well below economists’ expectations. Downward revisions to June and July figures reinforced signs of a weakening labor market, prompting increased certainty of a Federal Reserve interest rate cut later this month. The report also comes amid political controversy following the firing of the BLS commissioner and concerns over data integrity. Despite weak hiring, wage growth remained steady, and labor force participation rose slightly, though broader unemployment climbed to its highest since 2021.
Private Hiring Slows, Wage Growth Stabilizes
U.S. private-sector hiring rose by just 54,000 jobs in August, below expectations and down from July’s revised gain of 106,000, signaling growing labor market weakness. ADP data showed notable job losses in trade, transportation, and education sectors, though leisure and hospitality added 50,000 positions. Wage growth remained stable, but rising jobless claims and declining job openings added to concerns. The disappointing data has strengthened market expectations of a Federal Reserve interest rate cut later this month.
Mortgage Rates Drop Sharply In Anticipation of Rate Cut
The average 30-year fixed mortgage rate fell to 6.29% on Friday. This is the lowest rate since early October, following a weaker-than-expected August jobs report, marking the biggest one-day drop since August 2024. While this rate shift can significantly reduce monthly payments for homebuyers, mortgage applications remain sluggish as high home prices and economic uncertainty continue to deter demand. Homebuilder stocks rose on the news, but analysts suggest rates may need to drop into the 5% range to meaningfully revive buyer activity. Experts say affordability concerns, limited inventory, and labor market worries are still weighing on the housing market.
