US jobs shock. The focus is now on inflation.
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Why did the US non‑farm payrolls come in softer than expected?
Well, just as we warned, non-farm payrolls came in very soft on Friday. Markets reacted with surprise. Equity's no longer excited about rate cuts and maybe they're more worried about slowing economy. And it's the same story in Canada. Whilst politics is creating disarray in Japan over the weekend and in France today, Prime Minister's being replaced, but by who? And OPEC has a plan to cope with slower demand for oil. They're gonna create more oils. Uh let's keep those prices down. Obviously it's Monday, it's the 8th of September 2025. It's the morning call from NAB. Good morning. Well, even though our rate cut is even more certain from the Fed now, the stock market didn't rejoice in its usual fashion. There was actually a half percent fall on Friday in the Dow, a naught point three percent drop in the S P and the Nasdaq finished flat.
Shares were also down in Europe, a naught point seven percent drop in the DAX, for example. The US dollar was down naught point six percent on Friday on the DXY, but flat on the week. The Aussie was up naught point six percent on Friday and up a quarter percent over the week. Last week. The pound and the euro also both up naught point six percent on Friday, and big falls in bond yields on Friday as well, down nine basis points for ten year treasuries, down to four point oh seven per cent, two years at three point five one percent. That's down twenty two basis points over the last month. And here's Sky Masters from NAB in Sydney. So two year treasury yields were at three point six percent just before the non
farm payrolls came out, they dropped down to three point four eight percent soon after that. So a twelve basis point drop and then they made some ground back, but still down nine basis points on the day, same as ten years. So that tells us uh the payrolls numbers were quite a surprise to many. Uh first of all the number itself, but also the unemployment rate lifted as well from four and a quarter percent to four point three percent. So the market's reacting to that.
Yeah, Phil, y you're right, it was uh a surpr a a surprise to to the market. So, you know, quite a bit weaker uh the Perils report was based on expectations. I think it was a combination of both The headline payrolls print and the unemployment rate.
How did equity and bond markets react to the weak US jobs report?
So you had your payrolls print coming in at only twenty two thousand. So Yeah, the the consensus I think was sitting at around seventy. Seventy five thousand and and so that outcome did come in very much at the lower end of expectations. You also had downward revisions to the previous two months to of a combined uh downward downward vision revisions of twenty one thousand jobs. Uh but also I think what stood out was that the June number was revised to a fall, so a fall of thirteen thousand. So that was the first monthly employment. decline since December two thousand twenty. So I guess those numbers just all sort of fueling that um expectation that the the US labour market is is starting to weaken, which you know we we we did see in some of the the other um employment data data last week.
Mm-hmm. Yeah.
Well, we were saying as much, weren't we, last week, that it was it was coming and we you know, so we we we we weren't totally surprised because of all that other data. But uh I mean more concerning so the manufacturing payrolls actually fell by twelve thousand. This is the fifth loss in a row for those manufacturing numbers, and government payrolls down so l well, maybe we're seeing Doge now, down sixteen thousand, which was the second loss in a row as well. But that manufacturing number, a real big surprise.
Yeah, so I I've got it as it's the fourth consecutive decline for manufacturing. Not the fifth, but but either way, yes, it was it was another weak manufacturing print. Uh you also had weakness in professional and business services so that they they were softer as well. Um but they've been sort of um weak for for quite a few months now. So again, in in the breakdown of of the employment number, um private was up, public down. So The private up thirty eight thousand public down.
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Chapters
8 chapters
1
Why did the US non‑farm payrolls come in softer than expected?
0:01–2:07
2
How did equity and bond markets react to the weak US jobs report?
2:07–4:31
3
What does the payroll surprise mean for Fed rate‑cut expectations?
4:31–7:21
4
How will this week’s US CPI and PPI data influence the market outlook?
7:21–9:59
5
Why is Canada’s unemployment rate rising and what are the implications?
9:59–11:59
6
How could Japan’s and France’s political turmoil affect global bond markets?
11:59–14:42
7
What impact will OPEC’s increased oil output have on prices and markets?
14:42–16:47
8
What does the latest Australian consumer confidence and RBA cut signal for the economy?
16:47–17:05