Will Weak Payrolls Push the Fed to Cut this Month?
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US payrolls rose by only 22,000 in August, while monthly revisions lowered June’s payroll change again to a loss of 13,000 from the initial 148,000 gain. The unemployment rate ticked up to 4.3%, although indicators of layoffs and hours remained relatively stable. These figures will likely prompt the Fed to cut interest rates at the September 17-18 FOMC meeting.

Will Weak Payrolls Push the Fed to Cut this Month?

September 05, 2025

US payrolls rose by only 22,000 in August, while monthly revisions lowered June’s payroll change again to a loss of 13,000 from the initial 148,000 gain. The unemployment rate ticked up to 4.3%, although indicators of layoffs and hours remained relatively stable. These figures will likely prompt the Fed to cut interest rates at the September 17-18 FOMC meeting.

Trusted Insights for What’s Ahead®

  • Payrolls rose just 22,000 in August while June’s initial 148,000 gain was revised to a loss of 13,000, underscoring that labor demand has weakened in recent months particularly in tariff-exposed sectors.
  • The latest employment data suggest the Fed will cut monetary policy rates by 25bps rate at the September FOMC meeting, an expectation portended by Chair Powell in Jackson Hole. However, as layoffs remain low, we believe a 50bps cut is unlikely.
  • A reduction in policy rates appears likely regardless of the August CPI report due next week, as a risk to the maximum employment side of the Fed’s dual mandate currently outweigh those to price stability. Chair Powell will likely highlight this balance at the upcoming 17 September meeting.
  • The August employment report also increases the probability of a faster pace of easing than was implied in the June Summary
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Author

Mitchell Barnes

Mitchell Barnes

Economist

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