Job Slowdown, Gold Rallies, Rates in Focus

The US economy ended August with mixed signals, reflecting resilience in services, weakness in industry, and a cooling labor market. The ISM manufacturing PMI rose to 48.7 points, still in contraction territory, while S&P Global's PMI reached 53.0, showing divergence between surveys. Manufacturing orders fell 1.3% month-on-month, confirming industrial decline, and the trade deficit widened to $78.3 billion due to higher imports and stagnant exports. In contrast, services showed greater dynamism: the ISM PMI stood at 52, the best in six months, and the composite PMI at 54.6, although revised downwards. During the week, the focus was on the employment report. Nonfarm payrolls grew by only 22,000 in August, well below the 75,000 expected, with an average of 29,000 new jobs in the last three months.

In addition, June was revised to -14,000, the first negative figure since 2020. The unemployment rate rose to 4.3%, the highest since 2021, while wages moderated their growth to 3.7% y/y. Job vacancies also fell in July to 7.18 million from 7.43 million in June. These data reinforce expectations of a rate cut by the Federal Reserve on September 17: markets are almost completely discounting a 25 basis point reduction and assigning a 17% probability to a half-point cut. In response, the 10-year Treasury fell to 4.06%, a weeks-long low. In monetary policy, several Fed officials set the tone. Christopher Waller reiterated that they should cut rates and pointed out that tariffs are a tax that can slow growth. John Williams, president of the New York Fed, said he does not expect persistent inflation due to tariffs and projected growth of between 1.25% and 1.5% in 2025, with inflation around 3%. The Beige Book reflected stability in activity, while Goldman Sachs warned that a weakening of the Fed's independence could push gold to $4,500 an ounce in 2026.

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