John's Finance Corner: Jobs Data Misses the Mark—And That Could Mean Lower Rates
August’s labor market data came in softer than expected, and that’s turning heads at the Federal Reserve. The latest Bureau of Labor Statistics report showed just 22,000 jobs added—far below the 75,000 forecast. Revisions to June and July shaved off another 21,000 jobs, including a rare monthly decline of 13,000 in June—the first drop since December 2020. The unemployment rate also ticked up from 4.2% to 4.3%.
Private sector hiring didn’t fare much better. ADP reported just 54,000 new jobs in August, again missing the 75,000 mark. Meanwhile, the JOLTS report revealed job openings fell to 7.18 million in July, the lowest level since last September. Jobless claims remain elevated, and continuing claims have hovered above 1.9 million for 15 straight weeks.
Markets React—and Mortgage Rates Drop
This wave of soft labor data sparked a rally in mortgage-backed securities and treasury bonds, pushing mortgage rates to their lowest levels of 2025. It also increases the odds of a policy shift from the Fed, which balances inflation and employment when setting interest rates. Typically, the Fed raises rates to cool inflation and lowers them to support a slowing economy.
Fed Chair Jerome Powell recently signaled that a rate cut is getting closer, contingent on incoming data. Based on the latest labor reports, the chances of a Fed Funds Rate cut at the September 17th meeting are looking strong.
Inflation Reports Up Next
This week brings fresh inflation data with the Producer Price Index (PPI) and Consumer Price Index (CPI) reports. While modest increases are expected, they’re unlikely to outweigh the Fed’s growing concern over labor market weakness. And while the Fed Funds Rate doesn’t directly set mortgage rates, a cut could lift bond prices—potentially driving mortgage rates even lower.
Bottom Line
Soft labor data is shifting the Fed’s stance, and that could mean good news for borrowers. If inflation stays tame and employment continues to cool, we may see rate relief sooner than expected.
Wondering what this means for you?
Let’s connect. I’m here to help you navigate the numbers and explore how today’s trends could shape tomorrow’s opportunities.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
