The U.S. jobs report for August was weaker than expected, reinforcing that the American economy is slowing and causing equity markets to fall in pre-market trading.
Nonfarm payrolls added 142,000 net new jobs in August, which was less than the 161,000 consensus expectation of economists surveyed by Dow Jones Newswires.
At the same time, the U.S. Labor Department, which released the data, reported that the U.S. unemployment rate fell slightly to 4.2% in August, matching economists’ expectations.
The August jobs reports shows that the U.S. economy and labor market are cooling and paves the way for the U.S. Federal Reserve to lower interest rates at its next meeting on Sept. 18.
Futures traders are betting 100% that the U.S. central bank will lower interest rates later this month for the first time since the onset of the Covid-19 pandemic in 2020.
However, there continues to be some debate over whether the Federal Reserve will lower interest rates by 25 or 50-basis points.
Traders are currently pricing in a 59% probability that the central bank lowers interest rates by 25-basis points, with 41% betting on a 50-basis point rate reduction, according to CME Group.
The August payroll numbers build on other recent economic data that shows the U.S. economy is slowing, raising fears that a recession might be on the horizon.
Consequently, the latest jobs report has sent U.S. stocks lower in pre-market trading.
The benchmark S&P 500 index is down 0.25%, the blue-chip Dow Jones Industrial Average is 0.20% lower, and the tech-heavy Nasdaq has fallen 0.50% heading into the market’s open.
