U.S. employment data in August was significantly stronger than market expectations, prompting investors to re-evaluate the possibility of the Federal Reserve continuing to raise interest rates this month. Following the release of the data, U.S. Treasury yields and the dollar rose, while gold and Bitcoin fell, with the stock market performing relatively modestly.
162,000 new non-farm jobs added
The U.S. Bureau of Labor Statistics announced on Friday that non-farm employment increased by 162,000 in August, significantly exceeding economists' forecast of around 56,000. The unemployment rate remained at 4.1%. Over the past 12 months, the average monthly increase in non-farm employment was about 31,000, so these numbers are clearly stronger than expected.
Data for the previous two months was also revised upward. In July, the number of non-farm jobs increased from a reduction of 23,000 to an increase of 21,000, and the data for June was revised up to 31,000. The combined revision for June and July amounts to 55,000 jobs, further reinforcing the assessment that the labor market still possesses resilience.
Recruitment is focused on the catering and education sectors.
However, employment growth is not evenly distributed. In August, new jobs were mainly created in two sectors: catering services and local government education.
- 59,000 new additions to the catering and bar industry
- Local government education has seen an increase of 42,000 new students.
- Together, they account for approximately 62% of the new jobs created.
In contrast, there has been a reduction in jobs in the information industry, while major sectors such as financial activities, professional and business services, transportation, and retail have seen little change. This indicates that although the overall data is strong, the impact is not widespread.
In terms of salaries, the average hourly wage in August increased by 0.3% month-on-month and by 3.1% year-on-year; the labor participation rate rose to 61.6%.
Yields are putting high pressure on risky assets
After the employment data was released, the market quickly adjusted its assessment of the Federal Reserve's policy path. Reuters cited market pricing, stating that the probability of a 25-basis-point interest rate hike in September rose from 52% before the data release to around 59%.
Affected by this, the yield of 10-year U.S. Treasury bonds once again approached 4.80%, and the dollar strengthened accordingly. Gold fell by more than 2%, while silver fell by over 3%. Against the backdrop of rising interest rate expectations, assets that do not generate interest income are under pressure.
Bitcoin also weakened as a result. BTC fell below $80,000 after the data was released, having previously topped $81,000. As interest rate expectations shifted, some leveraged long positions were closed, exacerbating the short-term decline.
US stocks reacted relatively mildly. The S&P 500 index and the Dow Jones Industrial Average fell slightly in the morning, while the Nasdaq index was close to flat, indicating that on one hand, the market recognizes that economic growth still has support, and on the other hand, it is also taking into account the pressure of higher interest rates on valuations.
The next focus is on August CPI.
Next, market attention will shift to the U.S. CPI for August, which was released on September 11. Shortly after the release of this inflation data, the Federal Reserve will hold its interest rate meeting from September 15 to 16.
The current change is that employment data has now provided room for further tightening of policies. Whether actual action is taken next will depend more on whether inflation continues to show strong signals.
