August non-farm payrolls exceeded expectations! Interest rate hike expectations rise, and the U.S. labor market is "accelerating again."

The data released by the U.S. Bureau of Labor Statistics on Friday showed that non-farm employment increased by 162,000 in August, significantly higher than the average increase of only 31,000 per month over the previous 12 months. This figure far exceeded the market expectation of 55,000 and marked a remarkable reversal from the initial figure in July (a decrease of 23,000). The unemployment rate remained unchanged at 4.1%, with the number of unemployed stable at 7 million. The unexpected recovery in employment growth in August, along with a stable unemployment rate, indicates that the momentum in the labor market is stronger than previously anticipated. At the same time, the non-farm data for June and July was both revised upwardJune's job addition was revised from 20,000 to 31,000, and July's figures were revised from a decline of 23,000 to an increase of 21,000, resulting in a total increase of 55,000 jobs over the two months compared to previously published data. This means that the contraction in employment reported in July has been completely corrected, and the U.S. job market has begun to "re-accelerate" after several months of noticeable slowdown. Following the data release, the market reacted swiftlyCME's "FedWatch" showed that the probability of the Federal Reserve maintaining interest rates in September dropped to 49.4%, while the probability of a cumulative rate hike of 25 basis points rose to 50.6%. U.S. Treasury yields increased, stock index futures declined, and gold fell below $4,400. Previously, Federal Reserve Governor Waller stated on Thursday that if inflation continues to cool, he would prefer to keep interest rates unchanged in September. However, the strong performance of non-farm employment has tilted the balance towards a rate hike. Industry differentiation: Restaurants and education led the growth, while healthcare cooled and information continued to shrink From an industry perspective, although the increase in employment in August was substantial, its distribution was not balanced. The restaurant and bar industry added 59,000 jobs in the month, far exceeding the average monthly increase of 12,000 over the past 12 months, making it the largest single source of growth in August's non-farm employment. The local governments education sector added 42,000 jobs, largely offsetting the decline in July. Manufacturing employment continued to improve, with an increase of 16,000 jobs in August, totaling a gain of 58,000 since the low point in December 2025, with the machinery manufacturing and metal products manufacturing sectors adding 6,000 jobs each. The construction industry increased by 22,000 jobs, with non-residential specialized contractors continuing moderate growth. However, the healthcare sector, which has long supported the U.S. job market, showed a noticeable slowdownonly adding 13,000 jobs in August, well below the average increase of 32,000 jobs per month over the past 12 months. The information sector continued to be a major drag, shedding 23,000 jobs in August, having averaged a loss of about 8,000 jobs per month over the previous 12 months. Specifically, jobs in computing infrastructure, data processing, web hosting, and related services decreased by 8,000, while the publishing industry lost 7,000 jobs. There are signs that artificial intelligence is causing structural shocks to the job market. From a broader perspective, the labor force participation rate in August edged up to 61.6%, marking the first improvement in nearly a year. The average hourly wage increased by 0.3% month-on-month and by 3.1% year-on-year, indicating that the rebound in employment has not been accompanied by a significant acceleration in wage inflation. The number of people working part-time for economic reasons decreased by 414,000, down to 4.4 million. Mortgage rates hit a one-year high, adding chill to the real estate market Ahead of the non-farm data release, U.S. mortgage rates had already risen to their highest level in over a year. Data released by Freddie Mac on Thursday indicated that the average rate for a 30-year fixed mortgage rose to 6.71% this week, up from 6.66% last week, marking the highest level since July 2025. This year, the rate had previously dropped to a three-year low of 5.98% on February 26, but has been on an overall upward trend for several months due to the ongoing conflict in Iran. The yield on 10-year U.S. Treasuries has risen to 4.74%, significantly higher than the 3.97% observed before the conflict in Iran. The rise in mortgage rates will weaken the purchasing power of potential homebuyers, leading more to choose to wait and see. Economists state that substantive declines in mortgage rates are not expected this autumn; persistent high inflation not only erodes wage growth and real income but is likely to keep mortgage rates elevated for an extended period. The suspense over a potential Fed rate hike in September: Non-farm data is "in," with future focus on CPI The robust performance of non-farm employment in August has raised the probability of a Fed rate hike in September to around 50%. However, several analysts point out that this non-farm report alone may not be sufficient to ultimately determine the rate decision in Septemberunless the data is significantly weaker than expected. Federal Reserve Governor Waller may ultimately defer the final decision to the CPI data set to be released on September 11. Currently, the U.S. faces a complex policy environment: the labor market is exhibiting unexpected resilience, yet inflation remains well above the Fed's 2% target; mortgage rates have climbed to a high not seen in over a year, and the real estate market remains under pressure; the energy price shocks and supply chain strains resulting from the conflict in Iran continue. Fed Chair Waller recently stated that the primary focus at this stage should be on prices. This implies that the strong performance of non-farm employment in August has provided "labor market support" for a rate hike, but the final decision will still need to await the CPI data next week to complete the inflation dimension's "last piece of the puzzle." For the market, the Federal Reserve's meeting on September 15-16 is destined to be a suspenseful game.