U.S. employment data for August significantly exceeded market expectations, prompting investors to reassess the likelihood of another Fed rate hike this month. Following the release, U.S. Treasury yields and the dollar rose, while gold and Bitcoin declined, and stock markets showed relatively muted reactions.
Non-farm payrolls increased by 162,000.
The U.S. Bureau of Labor Statistics reported on Friday that non-farm payroll employment increased by 162,000 in August, significantly exceeding economists’ expectations of approximately 56,000. The unemployment rate remained at 4.1%. Over the past 12 months, the average monthly increase in non-farm payrolls was around 31,000, making this data notably stronger.
Data from the past two months were also revised upward. July non-farm payrolls were revised from a decrease of 23,000 to an increase of 21,000, and June’s data were revised up to 31,000. Combined, the revisions for June and July totaled 55,000, further reinforcing the view that the labor market remains resilient.
Recruitment is focused on food and beverage and education.
However, job growth was not evenly distributed. The majority of new jobs added in August came from the food service and local government education sectors.
- 59,000 new users added to dining and bars
- Local governments added 42,000 new education positions.
- Together, they account for approximately 62% of new jobs.
In contrast, the information sector saw a reduction in jobs, while several major sectors—including financial activities, professional and business services, transportation, and retail—experienced little change. This indicates that although the overall data is strong, the breadth of growth is limited.
Regarding wages, the average hourly wage increased by 0.3% month-over-month and 3.1% year-over-year in August; the labor force participation rate rose to 61.6%.
Higher yields are pressuring risk assets.
After the jobs data release, the market quickly adjusted its assessment of the Fed's policy path. According to market pricing cited by Reuters, the probability of a 25-basis-point rate hike in September rose from 52% before the data release to approximately 59%.
As a result, the U.S. 10-year Treasury yield rebounded close to 4.80%, while the dollar strengthened simultaneously. Gold fell more than 2%, and silver dropped over 3%. Amid rising interest rate expectations, interest-bearing assets like these are under pressure.
Bitcoin also weakened following the data release. BTC dropped below $80,000 after briefly rising above $81,000. As interest rate expectations shifted, some leveraged long positions were liquidated, amplifying the short-term decline.
U.S. stocks reacted relatively mildly. The S&P 500 and Dow Jones Industrial Average edged lower in early trading, while the Nasdaq hovered near flat, indicating that markets acknowledge continued support for economic growth while also readjusting for the pressure of higher interest rates on valuations.
The next focus is the August CPI.
Next, market attention will turn to the U.S. August CPI data, scheduled for release on September 11. Shortly after this inflation report, the Federal Reserve will convene its monetary policy meeting on September 15–16.
The current shift is that employment data has created room for further policy tightening. Whether action is actually taken next will depend more on whether inflation continues to send a stronger-than-expected signal.