US Payrolls May Contract Again, Weakening Case for September Fed Hike

US nonfarm payrolls are a key gauge of labor-market strength and a major input into Federal Reserve policy. Bloomberg economist Anna Wong said another decline in August employment would mark two consecutive months of job losses. Historically, the Fed has never raised interest rates during such a streak, which would signal that economic momentum is weakening despite policymakers’ concern about inflation.

The August payrolls report, due next week, now carries heightened significance after the Fed chair’s hawkish remarks briefly lifted expectations for a September rate increase. The shift in rate bets also pressured risk assets, with Bitcoin falling below $78,000. But the prospect of another negative payroll reading has since sharply reduced the perceived likelihood of a September hike as investors refocus on deteriorating labor demand.