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New Signs of Weakness in the US Job Market

A revision of US employment data reveals a weaker picture than initially reported. More than 900,000 jobs previously reported as created turned out never to have actually existed — indicating that the strength of the US labour market may have been somewhat overstated.
Recent trends further confirm this slowdown.

Hiring Slows, Layoffs Begin to Rise
Private sector job growth continues to decline, whilst redundancies are rising across industries sensitive to interest rates, such as:
- Technology,
- Banking and finance,
- Companies dependent on funding or consumer spending.

This combination suggests that companies are becoming cautious about expanding capacity, in line with weaker demand and economic uncertainty ahead.

Federal Reserve Perspective: "Low Hiring, Low Firing"
Federal Reserve Chair Jerome Powell has referred to an emerging pattern in the labour market: "low hiring, low firing."
This phenomenon signals stagnation — neither a particularly tight market condition, nor a sign of outright contraction.

For the Fed, employment data has become a key indicator.
If the weakness continues, the scope for maintaining high interest rates will narrow, and discussions of interest rate cuts could emerge sooner than expected.

Emerging Pressure Points
Several other indicators are also weakening:
- long-term unemployment is rising,
- hiring plans are at their lowest levels since the post-crisis period,
- companies are becoming more cautious about labour force expansion.

This indicates that the slowdown in the labour market is no longer confined to a single segment, but is beginning to be felt more broadly.

What Does This Mean for Economic Prospects?
A cooling labour market typically translates into:
- Potential weakness in consumer spending,
- More moderate economic growth,
- And increased likelihood of monetary policy easing by the Fed.

From a global perspective, this situation could affect capital flows and risk sentiment, particularly for emerging markets, although the impact will depend heavily on the direction of the US dollar and bond yields.