29 Sept 2025
The recently released Non-Farm Payroll (NFP) data surprised markets with a significantly lower-than-expected figure of 22,000 new jobs, alongside an upward revision of previous numbers. This weak labor market report, coupled with slowing wage growth and increasing layoffs, has heightened expectations for a September interest rate cut by the Federal Reserve and indicates a cooling US economy.
The recently released Non-Farm Payroll (NFP) data showed a surprisingly low figure of 22,000 new jobs, significantly missing expectations of around 75,000 and the 50,000-70,000 range discussed by Federal Reserve members.
The previous NFP figure was revised upwards from 73,000 to 79,000, which, combined with the low current release, further contributed to market surprise.
The unemployment rate reached 4.3%, which is considered high but aligns with institutional expectations.
Since April, total employment has shown no significant change, with only a slight modification recorded in August, and on average, the US economy created fewer than 8,000 new jobs over the last three months.
The Health and Social Services sector saw an increase of 31,000 jobs, with contributions from outpatient health services (13,000), residential nursing care (9,000), and hospitals (9,000), while Social Services increased by 16,000, primarily in individual and family services. Private Education and Health also experienced an approximate 46,000 increase, and the Hospitality sector added 28,000 jobs.
Decreases were observed in the Federal Government (15,000, with a cumulative 97,000 decrease year-to-date), Mining and Logging (6,000), Wholesale Trade (12,000), and Manufacturing (12,000), including a 15,000 reduction in transportation equipment manufacturing due to strikes.
The growth in the Health and Social Services sector represented the lowest since January 2022, despite this sector contributing over 40% of all new jobs in the past three years.
Data revisions indicated 13,000 jobs lost, which was further adjusted to 14,000, resulting in only 29,000 net jobs created after all adjustments.
Job growth has declined for several consecutive months, job opportunities have fallen, and wage growth has slowed, marking the fourth consecutive month where job growth remained below 100,000, representing the weakest trend since the COVID-19 pandemic.
While the labor market typically showed low hiring and low layoffs, recent trends indicate an increase in layoffs.
Following the release of the weak data, market expectations for a September interest rate cut surged to 99%, with anticipation of a quarter-point reduction during the upcoming Federal Reserve meeting.
Stock futures reacted positively, technology stocks traded higher, bond yields decreased, and gold strengthened as a safe-haven asset.
Bitcoin recorded a slight decrease, showing a somewhat different reaction compared to the stock market, while the dollar came under pressure due to the high probability of a Fed rate cut.
The report suggests the US labor market has significantly cooled down, potentially entering a recessionary phase in employment and job growth.
This labor market data could influence the Federal Reserve's perspective on market weakness, potentially posing a challenge if next week's Consumer Price Index (CPI) data shows high inflation, forcing the Fed to balance price stability with preventing excessive labor market weakness.
The US labor market has significantly cooled down, entering a recessionary phase in employment and job growth, which will likely influence the Federal Reserve's policy decisions.
| Category | Metric | Observation | Implication |
|---|---|---|---|
| Non-Farm Payroll (NFP) | Current Jobs Created | 22,000 | Significantly below expectations (75,000) and Fed's range (50,000-70,000), surprising the market. |
| Non-Farm Payroll (NFP) | Previous Revision | Revised from 73,000 to 79,000 | The upward revision of past data compounded market shock with the low current release. |
| Unemployment Rate | Current Rate | 4.3% | High but within institutional expectations, not the primary market shock. |
| Overall Job Growth | Average New Jobs (Last 3 Months) | Less than 8,000 | Indicates a severe slowdown in job creation and a cooled labor market. |
| Job Growth Trend | Consecutive Months Below 100k | Fourth month | Represents the weakest trend since the COVID-19 pandemic, signaling sustained weakness. |
| Sectoral Performance | Health & Social Services Growth | 31,000 jobs (lowest growth since Jan 2022) | Significant slowdown in a sector that previously contributed over 40% of all jobs. |
| Labor Market Dynamics | Layoff Trend | Increasing | A shift from previous low hiring/low layoff environment, further weakening labor market outlook. |
| Monetary Policy | September Rate Cut Expectation | 99% | Market strongly anticipates a Federal Reserve rate cut due to the weak labor data. |
| Currency Market | US Dollar Performance | Under pressure | Reflects the high probability of an upcoming interest rate cut by the Fed. |
| Fed's Future Challenge | Policy Dilemma | Potential high CPI vs. weak labor market | The Federal Reserve must balance price stability with preventing excessive labor market weakness. |
