Weak US labor market suggests big rate cut
Today, the first US employment report was published after President Trump had fired the head of the Bureau of Labor Statistics.
Commerzbank Economic Research
09/05/2025
The data ...
In August, job growth in the US was only 22,000. This is below expectations (consensus 75,000, Commerzbank 70,000). Revisions to earlier data reduced the data for June and July by virtually the same amount, namely by a total of 21,000. As expected, the unemployment rate rose from 4.2% to 4.3%. Also in line with forecasts, average hourly wages rose by 0.3% from the previous month. In year-on-year terms, wages rose by 3.7% after 3.9% in July.
... and the background
The picture is becoming increasingly clear: the upturn in the US labor market is stalling. Employment has barely risen in recent months (Chart 1). According to revised data, there was even a slight decline in June. Similarly, the total number of hours worked by all employees is stagnating since March.
In principle, one possible explanation for the weaker employment dynamics is a lack of available workers, for example due to Trump's significantly more restrictive immigration policy. However, a much more important factor is likely to be the weakening demand for labor. The relevant details of consumer confidence surveys show that it has become more difficult to find a job. According to the Atlanta Fed, job switchers are no longer seeing higher wage increases than people who remain in their jobs. The survey conducted by the National Federation of Independent Business (NFIB) points in the same direction, showing that it has become easier to fill vacancies.
Overall, we are seeing a number of signs of weakness in the labor market. Part of the economy is booming thanks to AI-related investment, but the more interest rate-sensitive sectors, such as construction, are clearly experiencing increasing problems.
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