Nonfarm payrolls rose just 22,000 in August, the weakest since 2020. June was revised into negative territory, the unemployment rate climbed to 4.3%, and wage growth slowed to 3.7% y/y. Full-time jobs shrank again, replaced by part-time roles, while multiple jobholders jumped to the highest since COVID. Health care added jobs, but government, manufacturing, and energy all slipped. With revisions leaving almost no net job creation, markets locked in expectations for a September cut — and put 50 bps back on the table.
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The debate now turns on size: a smaller cut signals caution, while a larger one would acknowledge how quickly the labor market is losing momentum. Either way, the weak breadth of job growth makes clear the slowdown is spreading across industries.

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What It Means for Markets

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• If the Fed cuts 50 bps: A surprise could spook markets the economy is eroding too fast and needs a rescue. Investors are taught to rotate into more safe assets like consumer staples, gold, and healthcare when this occurs.
• If the Fed cuts 25 bps: The more likely outcome — gradual easing while growth risks remain. Smallcap stocks and growth stocks tend to outperform, as do companies with lower valuations and strong balance sheets. Gold and silver likely extend their gains as a hedge against the dollar devaluing.
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Consensus is that Powell will cut in September. The Fed enters September under pressure to act — and its credibility, not just its liquidity tools, is on the line.