Will Fed chair Jerome Powell cut rates following the weak jobs report?

U.S. economy added just 22,000 jobs in August, extending a four-month streak of weakening labor gains. The figure came in well below Wall Street’s expectation of around 75,000.

At the same time, the unemployment rate edged up to 4.3%, its highest level since late 2021, according to the Bureau of Labor Statistics.

The soft data reinforced concerns that the labor market is losing momentum under the strain of trade tariffs, corporate cost-cutting, and rising automation. For the first time since before the pandemic, there are now more unemployed Americans than job openings.

The weak report adds urgency ahead of the Federal Reserve’s September 16–17 policy meeting, where a rate cut is now widely expected.

ALSO READ: US stock market crashes — Dow, S&P 500, Nasdaq all lost after shocking August jobs report; possible Fed rate cut ahead

Fed Chair Jerome Powell has already acknowledged the risks of a slowing labor market, but policymakers must weigh the benefits of lower borrowing costs against the risk of reigniting inflation.

ALSO READ: US labour market in doldrums as August hiring adds just 22,000 jobs — unemployment hits four-year high

A cut would bring relief to households and businesses, likely pushing down mortgage rates, auto loans, and corporate financing costs. Yet with consumer prices still elevated, the Fed faces one of its toughest balancing acts since the pandemic recovery.

Friday’s release also contained significant revisions. July job gains were raised to 79,000, while June was revised sharply downward to a loss of 13,000 jobs—the first monthly decline since 2020.

Such wide swings have added to skepticism about the reliability of official labor data, especially after President Donald Trump dismissed the BLS commissioner last month, accusing the agency of “manipulated” figures. The firing has cast a political shadow over the independence of U.S. economic statistics at a sensitive moment.

Wall Street and corporate drivers

Markets largely shrugged off the weak numbers, betting that monetary easing will cushion the slowdown. S&P 500 futures rose 0.2%, the Nasdaq climbed 0.6%, while Dow futures dipped slightly. The 10-year Treasury yield slipped to 4.09%, signaling rising demand for bonds.

Earnings also drove sharp moves in individual stocks:

• Broadcom surged 14% after reporting 63% year-over-year growth in AI revenue and forecasting a strong fourth quarter.
  
  
• Lululemon tumbled over 20%, citing weaker U.S. sales that dragged second-quarter revenue below guidance.

Global equities showed tentative gains. In Europe, Germany’s DAX and France’s CAC 40 added 0.1%, while London’s FTSE 100 climbed 0.4%.

In Asia, Japan’s Nikkei 225 jumped more than 1% after stronger wage growth and household spending lifted expectations that the Bank of Japan will raise rates in October.

China’s markets also bounced back after recent losses, with Hong Kong’s Hang Seng up 1.5% and the Shanghai Composite gaining 1.2%.

South Korea, Taiwan, and Australia posted modest advances, while India’s Sensex slipped slightly.

For Powell, the choice is stark: cut rates to support jobs and risk higher inflation, or hold steady and risk a deeper slowdown. Either way, the Fed’s next move is set to shape not just Wall Street sentiment but the trajectory of the global economy through the end of the year.

FAQs:

Q1. What did the August jobs report show about the U.S. economy?
The August jobs report showed only 22,000 jobs added, with unemployment rising to 4.3%, the highest since 2021.

Q2. Will the Federal Reserve cut rates after the weak August jobs report?
Markets widely expect a Fed rate cut at the September 16–17 meeting as hiring slows and unemployment climbs.