US job data aftershocks: markets rapidly price In September rate cut

Donald Trump dismissed the head of the Bureau of Labor Statistics after the agency released significantly weaker-than-expected job data on August 1. The non-farm payrolls (NFP report) showed that the US added just 73,000 jobs in July, well below consensus expectations of 110,000. In addition, job gains from the previous two months were substantially revised lower.

Amidst the turmoil in the headlines, futures markets rapidly repriced to put near 100% certainty on the chances of a one-notch interest-rate cut when the Federal Reserve meets on Sept. 17.

We've visualized how expectations have evolved using the CME's FedWatch tool. Chances that Fed Chair Jerome Powell (who has also been threatened with dismissal by Trump) and his colleagues would stand pat and keep the key rate at its current 4.25%-4.5% have evaporated. (No probability is currently being given to a two-notch, 50-basis-point cut; that scenario occurred last year in the wake of another unexpectedly weak job report.)

Just two days before the job report shock, the Fed voted to hold rates steady, concerned about sticky inflation -- but that vote was split 9-2, which has been unusual under Powell's generally consensus-seeking tenure. The two dovish governors could soon be joined by a third: Adriana Kugler unexpectedly announced her departure on Aug. 1, opening up a slot for a Trump appointee.

CEIC users could have tapped Revelio Labs' high-frequency data on job postings for early signs of the labor-market deterioration. As our second chart shows, this alternative indicator has steadily softened over the past year, and has shown a consistent decline in recent weeks.

Returning to the NFP report, our third chart examines how recent job-gain figures were cut by a total of 258,000 — the largest downward revision on record outside of the pandemic shock. (We've previously written about how NFP revisions are so frequent that they're a good use case for our market-leading point-in-time data; Trump had -- with no evidence -- accused BLS Commissioner Erika McEntarfer of being responsible for those revisions, allegedly after "phony" job figures released to help President Biden.)

Finally, we break down job gains by sector -- showing how US employment had been persistently reliant on healthcare and social-services sectors in recent months. Federal government employment continued to decline in the wake of Elon Musk's DOGE cuts.

Click here to read about who has also been threatened with dismissal by Trump, and NFP revisions are so frequent that they're a good use case for our market-leading point-in-time data

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