Following the release of weak July nonfarm payrolls data, Goldman Sachs now expects the Federal Reserve to cut interest rates three times this year. The company said if the August nonfarm employment report is also weak, it may cut interest rates by 50 basis points.
Data released by the US Bureau of Labor Statistics on Friday showed that the number of nonfarm payroll jobs in the US grew less than expected in July, with an increase of only 0.114 million people and an unemployment rate of 4.3%, which may exacerbate concerns about the deterioration of the job market and possibly lead to an economic downturn.
Average hourly wages increased by 0.2% last month after a 0.3% increase in June. In the 12 months ending in July, wages increased by 3.6%. This is the smallest year-on-year increase since May 2021, while the increase in June was 3.8%.
The unexpected fourth consecutive rise in the US unemployment rate in July to 4.3%, the highest since October 2021, triggered a warning signal indicating an economic recession.