US Macro Insights: August 2025 NFP Preview
Stars need to align (to the downside) for this jobs report to force a Sept 50bp cut
Summary: After July’s downside surprise and significant downward revisions to the previous two months’ NFP readings, expectations for August’s headline number are less optimistic. There continues to be a wide range of estimates, with the consensus median expectation at 75k and unemployment rate at 4.3%. We expect the main driver of job growth this month to be leisure & hospitality given a boost in summer hiring, with education & health services potentially serving as a modest drag (and construction jobs remaining a toss-up due to the state of housing). Given the magnitude of recent revisions, there will continue to be a focus on revised figures ahead of the QCEW revisions released next week.
Market Implication: As of this writing, a 25 bps September cut (our house view) is fully priced in; thus, a headline NFP reading of 50k-100k and U/R at or around consensus is unlikely to sway this view. Further significant downward revisions, a very low headline print, or a spike in the unemployment rate could accelerate a rally in the front end, and spark discussion of a potential 50 bps cut. Conversely, an upside surprise in the headline NFP (150K+) and/or a big decline in the unemployment rate would hit September FOMC cutting odds (post Powell Pivot 2.0, we doubt it goes to 50/50), but curve flattening would continue.