An employment report that touches a sensitive nerve in the market.

On September 4th, the U.S. Department of Labor released the July Job Openings and Labor Turnover Survey (JOLTS) data, which was once highly valued by the former Federal Reserve Chairman and current U.S. Treasury Secretary Yellen, and is now also a highly valued decision-making reference for the Fed.

The data shows that in the United States, job openings decreased to 7.67 million in July, down 237,000 from the revised June figure, marking the lowest level since January 2021. The figure of 7.67 million was also significantly lower than the 8.1 million expected by Dow Jones economists, representing a severely weaker-than-expected data.

Additionally, the Department of Labor revised the previous figure from 8.184 million to 7.91 million, once again dousing the market with cold water. More worryingly, the number of layoffs in the U.S. increased to 1.76 million in July, a significant increase of 202,000 from June. The overall number of separations increased by 336,000, raising the turnover rate as a percentage of the total workforce to 3.4%.

The data breakdown also shows that the ratio of job openings to the number of unemployed in the United States fell to 1.1:1 in July, lower than the pre-pandemic ratio of 1.2:1, returning to the 2018 level; the hiring rate slightly increased from 3.3% to 3.5%, at a low level, comparable to 2014. Among them, hiring in the leisure and hospitality sectors was particularly sluggish, rebounding slightly from an unusually low 4.5% in June to 5.5%.

Hiring increased, with 273,000 new hires added during the month, bringing the hiring rate to 3.5%, 0.2 percentage points higher than in June.

After the data was released, the financial blog Zerohedge directly rated the JOLTS report as "catastrophic."

The market once again fell into recession panic: the U.S. stock Nasdaq 100 index took a short plunge, falling 0.8%, but then quickly narrowed the decline to only a slight drop. The S&P 500 index fell 0.3% in the short term, then turned positive during the session. Money poured into the bond market again, with the 10-year U.S. Treasury yield falling for the second day in a row, dropping to 3.75%, the lowest level since July last year. Gold prices quickly climbed to $2,500.26 per ounce in the short term, setting an intraday high.

Citi believes that the U.S. job market is on the verge of a sharper weakening: although the lower layoff rate in July indicates that the labor market has not sharply deteriorated, the trend of fewer job openings and lower hiring rates, while the unemployment rate is steadily rising, shows that the job market is on the verge of a sharper weakening. Job vacancies are expected to continue to fall in the coming months, and the unemployment rate is expected to rise at an accelerated rate.

There is also analysis that job growth in the United States has been slowing, the unemployment rate is rising, and it is becoming increasingly difficult for job seekers to find work, adding to fears of a potential recession. Fed policymakers have made it clear that they do not want to see further cooling in the labor market, and it is widely expected that they will begin cutting rates at the FOMC meeting in September.

There are also several employment reports coming out this week. In particular, Friday's non-farm report will have the most direct impact on the Fed's policy decisions in September.

On Thursday, the U.S. August ADP employment change data will be released, which is known as the "little non-farm" report. The market expects an increase of 145,000 in August ADP employment; in July, it was an increase of 122,000, the smallest increase since January 2024.

On Thursday, the U.S. will also release the number of initial jobless claims for the week ending August 31, which is expected to be 230,000, slightly lower than the previous week's 231,000.

On Friday, the U.S. Department of Labor will release the much-anticipated August non-farm employment data. The market expects an increase of 161,000 U.S. jobs in August, with the unemployment rate slightly dropping to 4.2%.

Market analyst Yohay Elam previously predicted that if the non-farm payrolls grew by 150,000-200,000 in August, the Fed could cut interest rates without fear of a recession. This would put pressure on the dollar while boosting gold and the U.S. stock market.

If the U.S. non-farm payrolls increase by 200,000 to 250,000 in August, it would reduce expectations of a 50 basis point rate cut by the Federal Reserve, which would boost the dollar and depress gold, but gold would remain strongly supported.

If the U.S. non-farm payrolls are above 250,000 in August, some will wonder if the Fed will enter an ongoing cycle of rate cuts, which would cause the U.S. stock market and gold to decline while supporting the dollar.