Disappointing Job Report Spurs Market Panic, Rate Cut Speculation

The disappointing U.S. employment report for July unleashed a “Freakout Friday” in financial markets, resetting expectations for Federal Reserve rate cuts next month. The report showed a jump in the unemployment rate and the weakest private-sector hiring in 16 months.

BIG BAD BERYL

Hurricane Beryl, which hit Texas during the survey week, may have influenced the data. The BLS noted no discernible effect, but economists highlighted a record number of weather-related absences from work.

TEMPORARY LAYOFFS

Temporary layoffs surged to a three-year high, accounting for over half of the 352,000 increase in unemployed individuals. Economists believe many of these layoffs are related to Beryl and may be temporary.

CONSTRUCTION JOBS STILL HUMMING

Construction jobs grew by 25,000, above pre-pandemic averages, indicating a potential recovery in housing starts.

PRIME-AGED PRIME TIME

Prime-aged labour force participation rose to 84%, the highest since 2001. For men, it hit 90%, and for women, it matched a record high of 78.1%.

Despite the grim overall numbers, these factors suggest the job market may not be as bleak as it appears.