US non-farm payrolls rise by 114,000 in July

Hiring in the US slowed abruptly last month, prompting talk in markets of 'policy mistakes' by the Fed and of a 'growth scare'.

According to the Department of Labor, non-farm payrolls rose by 114,000 in July.

Economists had forecast an increase of 175,000.

Hiring for the prior two months combined was revised down by 29,000.

Average hourly earnings increased by 0.2% month-on-month (consensus: 0.3%).

As of 1332 BST, the yield on the two-year US Treasury note was falling by a large 26 basis points to 3.8859%.

Labor said that the landfall of hurricane Beryl in Texas on 8 July during the reference periods for the two surveys that generate the jobs report had "no discernible effect" on the data for July.

The rate of unemployment meanwhile jumped by two tenths of a percentage point from the month before to 4.3% (consensus: 4.1%), even if part of the rise was due to a rise in the labour force participation rate from 62.6% to 62.7%.

Hiring in the goods side of the economy actually improved, picking up from 11,000 in June to 25,000 last month, the Establishment Survey showed.

In services on the other hand, payrolls only grew by 72,000, after 125,000 in June.

Public sector hiring also cooled, from 43,000 to 17,000.

The three-month moving average of payrolls gains edged up, from 168,000 to 170,000.

"The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with a 50 bp cut or even an intra-meeting move, although it’s worth noting that the Sahm Rule has not actually been triggered yet," said Stephen Brown, deputy chief North America economist at Capital Economics.

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