The markets received some key data Friday morning as the August jobs report was released.  It showed that the US economy created fewer jobs than expected – just 22,000 versus a forecast of 75,000.  This is a continuation of a long trend of a weakening, but not weak, labor market.

https://www.cnbc.com/2025/09/05/jobs-report-august-2025.html

I say the US labor market is not weak because the unemployment rate rose last month to just 4.3% from 4.2% in July.  The labor force participation rate edged higher to 62.3% and the labor force swelled by 436,000, accounting for the tick higher in the unemployment rate as more people began looking for jobs.

The unemployment rate rose to 4.2% in July 2024 and has hovered around this level for over a year now.  For comparison, here are some unemployment rates from around the world.

Australia                                4.21%

Brazil                                      6.10%

Canada                                  6.32%

China                                     5.10%

Denmark                                4.89%

EUROPEAN UNION           6.00%

France                                   7.36%

Germany                                3.29%

Greece                                   9.36%

India                                       5.10%

Ireland                                    4.38%

Italy                                         5.80%

Japan                                     2.50%

Mexico                                   2.80%

Norway                                  3.80%

Poland                                   2.93%

Russia                                   3.12%

South Africa                          33.20%

South Korea                          3.00%

Spain                                     10.29%

Sweden                                 8.36%

Switzerland                           2.25%

Turkey                                    8.50%

United Kingdom                   4.15%

 

https://en.wikipedia.org/wiki/List_of_countries_by_unemployment_rate

 

This disappointing jobs report has dramatically increased the odds for interest rate cuts through the remainder of the year.  The markets are now pricing in a 100% chance of a rate cut the next time the Fed meets this month.

September 17^th meeting     100% chance of an interest rate cut

October 29^th meeting          81% chance of a second interest rate cut

December 10^th meeting      77% chance of a third interest rate cut

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

 

So, it’s the Fed to the rescue – maybe.  We’ll have to see if lower borrowing costs will be enough to clear the cloud of uncertainty keeping companies from hiring more employees.  There’s a lot of uncertainty out there and while the markets will welcome lower rates, I’m not sure if it will be enough for companies to overcome concerns over tariffs, inflation, immigration, and global tensions.  I hope so.

 

I’ll be traveling next week so there may or may not be a weekly email.  Just more uncertainty.

 

Have a great weekend.

 

Jack C. Harmon II, CFP^®, CIMA

Principal, Harmon Financial Advisors

Registered Principal, Raymond James Financial Services

 

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