Jobs Report Drops 23K Bombshell, Fed September Hike Odds Slip Below 50% 📉

The U.S. labor market contracted for the second consecutive month in July, shedding 23,000 jobs according to the Nonfarm Payrolls Report released Friday morning. Economists had forecast a gain of 80,000 positions. The prior month's figure was also revised sharply lower, with June now showing an addition of just 20,000 jobs, down from the originally reported 57,000. May's gains were similarly trimmed to 63,000 from 129,000. The last negative payrolls print was in February, when the economy lost 156,000 jobs. The unemployment rate ticked down to 4.1%, versus expectations of 4.2% and June's 4.2%.

Average hourly earnings also undershot forecasts, rising 0.1% month-over-month against the 0.3% expected, and 0.3% in June. Year-over-year earnings growth came in at 3.2%, below the 3.5% expected and 3.4% in June.

Market reaction was swift across traditional assets. U.S. stock index futures moved higher and interest rates dipped. Gold climbed 3% on the day, with silver up just under 6%. Crypto markets showed little movement, with bitcoin ($BTC) holding modestly higher near $65,000.

Prior to the report, CME FedWatch had priced in a 55% chance the Federal Reserve would raise rates at its September policy meeting. In the immediate aftermath of the print, that probability slipped to 46%. Joe Brusuelas, chief economist at RSM, offered a contrarian view, attributing much of the weakness to a seasonal adjustment quirk tied to the timing of the World Cup. "No signal from the jobs report, and we think investors will turn their attention to the July CPI report next week," Brusuelas said.