The United States labour market revealed fresh signs of slowing momentum in August as unemployment edged up to 4.3% from July’s 4.2% in line with market expectations.

According to the Bureau of Labor Statistics, the US economy added just 22 000 nonfarm jobs last month, a sharp slowdown from the 75 000 jobs added in July. The muted figure was partly propped up by the healthcare sector, which gained 31 000 jobs, but this was almost entirely offset by declines in federal government employment, down by 15 000, as well as in mining, quarrying, and oil and gas extraction, which shed a further 6 000 positions.

The market’s response was immediate and telling. The US dollar slipped by 0.7% to trade below the 98.00 level, offering a notable boost to the rand, which strengthened by 22 cents to R17.57. With the unemployment rate now marginally higher and job creation evidently slowing down, markets have interpreted the data as supportive for the case of a possible 25-basis point interest rate cut by the Federal Reserve.

However, any expectations of rapid monetary easing should be tempered. The broader US economy has proven resilient, and policymakers are likely to remain cautious, ensuring any rate reductions proceed at a modest pace.

Wage growth, a key focus for both the Fed and market-watchers, remained steady at 0.3% month over month in August and 3.7% over the year. Meanwhile, payroll figures for June were revised down and those for July revised up, resulting in 21 000 fewer jobs than previously reported across the two months.

The August employment report makes clear that any path to lower interest rates will be cautious, as the Federal Reserve balances underlying economic resilience against the warning signs of a cooling jobs market.