U.S. Jobs Market Slows in July with Disappointing Job Additions and Rising Unemployment Rate

U.S. Jobs Market Experiences Significant Slowdown in July

The jobs market in the United States showed signs of considerable softening in July, with the Bureau of Labor Statistics reporting an addition of only 114,000 jobs for the month. This figure fell significantly short of the anticipated 175,000 jobs and represented a decline from the previously reported 179,000 jobs added in June, which itself was revised down from an initial estimate of 206,000.

In addition to the disappointing job numbers, the unemployment rate saw an uptick, rising to 4.3% from 4.1% in June. This rate was also higher than forecasts that had predicted it would remain stable at 4.1%.

In response to these figures, the price of bitcoin (BTC) remained relatively stable, trading at approximately $64,500, showing minimal change from the previous 24 hours. However, the reaction in traditional financial markets was more pronounced:

• The 10-year Treasury yield saw a sharp decline, dropping 15 basis points to 3.83%, marking the lowest level in over a year.
• The two-year yield fell even further, decreasing by 23 basis points to 3.93%.
• On the stock market front, Nasdaq futures plummeted by 2.3%, while the S&P 500 index dropped by 1.6%.
• The U.S. dollar experienced a decline of 0.6%.
• In contrast, gold prices surged, reaching a new record high of $2,513 per ounce, an increase of 1.3%.

Examining further details from the report, average hourly earnings saw a modest rise of 0.2% in July, which was below the expected 0.3% and lower than the 0.3% reported for June. On an annual basis, hourly earnings increased by 3.6%, slightly missing the 3.7% forecast and down from 3.8% in June. Additionally, average weekly hours came in at 34.2, falling short of expectations of 34.3, consistent with June’s figures.

Market traders, who had already fully factored in a 25 basis point cut by the Federal Reserve in September, are now rapidly adjusting their expectations to anticipate an even more substantial reduction. According to the CME FedWatch Tool, there is now a 70% probability of a 50 basis point rate cut in September, compared to only a 22% chance just one day prior. Looking ahead to the December meeting, traders are beginning to position themselves for a total of 125 basis points in rate cuts by the end of the year, a significant increase from the previously dominant expectation of only 75 basis points in cuts for 2024.