Weak Jobs Data Sparks US Labour Market Concerns Amid Fed Hold Expectations

According to ABN AMRO's Chief Economist Nick Kounis, renewed US labour market weakness is evident in recent data. Nonfarm Payrolls fell by 23K in July, with downward revisions to previous months' figures leaving the 3-month average gain in employment at just +20K.

Kounis notes that while the unemployment rate declined, this was due to a drop in labour force participation to multi-decade lows. This is typically an indicator of cyclical labour market weakness, rather than structural issues.

Despite the softening data, ABN AMRO still expects the Federal Reserve to stay on hold over the next few months, citing high inflation risks that skew towards a hike.