NEWS AND INSIGHTS | INSIGHTS

CIO Notebook: U.S. Non-Farm Payrolls Light, Putting Fed Cut Back on the Table

八月 01, 2025
Shannon Saccocia, CFA, 首席投资官 — NB私募财富

This print increased expectations for Fed rate cuts (over 80% probability in September, 100% for October), making upcoming inflation data and the Fed’s Jackson Hole event later this month even more critical for policy direction

July non-farm payrolls released today were at the low end of a wide range, posting a gain of +73k compared with +104k consensus coming into this morning. The print broke the trend of five previous months in which non-farm payrolls were better-than-expected. However, more concerning were the sharp downward revisions for May and June. May’s total fell by -125k while June was revised lower by -133k, bringing the trailing three-month average for job gains to only +35k – the lowest since 2020 and well off the +150k pace previously reported in June.

The details of the report did little to disrupt the narrative of a slowing labor market. The bulk of the gains came in heath care and social assistance hiring (+73k) while previously strong leisure and hospitality added only +5k in July. Retail (+16k) and financial services (+15k) posted gains, but manufacturing (-11k) and government jobs (-10k) were negative. Despite the lackluster payrolls, average wages rose by +0.3% month-over-month or +3.9% year-over-year; average hours worked rose slightly to 34.3.

Cited as an area of focus in Federal Reserve Chair Jerome Powell’s comments on Wednesday, the unemployment rate ticked back up to its May level of 4.2%, even as the labor participation rate continues to fall. Standing at 62.2% as of the end of July, labor participation is now down by -0.5% in 2025 – a worrying sign for a Fed looking to deliver on its mandate of maximum employment. There is also evidence in the data that immigration has fallen off meaningfully over the course of 2025, with a decline of -1.7 million foreign born workers since March.

Today’s release sharply reversed the move higher in yields following the Fed meeting on Wednesday, and odds for an interest rate cut have moved north of 80% for September and back to 100% for October. The data also may provide some cover for Fed Governors Christopher Waller and Michelle Bowman, who cited the risk of deterioration in the labor market as justification for their dissents in Wednesday’s meeting. With today’s job print, the two additional inflation readings ahead of the September meeting become even more pivotal and shine a stronger light on Jackson Hole later this month. Not surprisingly, Treasuries are rallying on today’s news, as yields move lower across the curve.

U.S. equity markets opened lower as the jobs data is inciting fear that tariffs and other sources of political uncertainty are weighing more heavily on economic growth than previously thought. In addition, President Donald Trump signed a new executive order today that levies a new round of “reciprocal” tariffs across a broad swath of countries, with currency markets in countries such as Canada, South Africa, and Switzerland reacting negatively to the announcements. While some progress has been made over the past 48 hours with Malaysia, South Korea, and Mexico, the threat of continued escalation is likely to remain a source of concern for markets in the coming weeks.

IMPORTANT INFORMATION:

This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. Diversification does not guarantee profit or protect against loss in declining markets. Investing entails risks, including possible loss of principal. Investments in private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in private equity are intended for sophisticated investors only. Unless otherwise indicated, returns shown reflect reinvestment of dividends and distributions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

Portfolio positioning views expressed herein are those of Neuberger Berman’s Private Wealth Investment Group, which may include those of the Neuberger Berman’s Asset Allocation Committee. Asset allocation and positioning views are based on a hypothetical reference portfolio. The Private Wealth Investment Group analyzes market and economic indicators to develop asset allocation strategies. The Private Wealth Investment Group works in partnership with the Office of the CIO. The Private Wealth Investment Group also consults regularly with portfolio managers and investment officers across the firm. The Asset Allocation Committee is comprised of professionals across multiple disciplines, including equity and fixed income strategists and portfolio managers. The Asset Allocation Committee reviews and sets long-term asset allocation models, establishes preferred near-term tactical asset class allocations and, upon request, reviews asset allocations for large, diversified mandates. Asset Allocation Committee members are polled on asset classes and the positional views are representative of an Asset Allocation Committee consensus. The views of the Asset Allocation Committee and the Private Wealth Investment Group may not reflect the views of the firm as a whole and Neuberger Berman advisers and portfolio managers may take contrary positions to the views of the Asset Allocation Committee or the Private Wealth Investment Group. The Asset Allocation Committee and the Private Wealth Investment Group views do not constitute a prediction or projection of future events or future market behavior. Defensive positioning generally means an underweight bias on allocations to risk assets such as equities and alternatives. Positioning views may change over time without notice and actual client positioning may vary significantly. Discussion of yield characteristics or total returns of different asset classes are for illustrative purposes only. Such asset classes, such as equities and fixed income, may have significantly different overall risk-return characteristics which should be consider before investing.

The information in this material may contain projections, market outlooks or other forward-looking statements regarding future events, including economic, asset class and market outlooks or expectations, and is only current as of the date indicated. There is no assurance that such events, outlook and expectations will be achieved, and actual results may be significantly different than that shown here. The duration and characteristics of past market/economic cycles and market behavior, including any bull/bear markets, is no indication of the duration and characteristics of any current or future be market/economic cycles or behavior. Information on historical observations about asset or sub-asset classes is not intended to represent or predict future events. Historical trends do not imply, forecast or guarantee future results. Information is based on current views and market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Discussions of any specific sectors and companies are for informational purposes only. This material is not intended as a formal research report and should not be relied upon as a basis for making an investment decision. The firm, its employees and advisory accounts may hold positions of any companies discussed. Nothing herein constitutes a recommendation to buy, sell or hold a security. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Investment decisions and the appropriateness of this content should be made based on an investor's individual objectives and circumstances and in consultation with his or her advisors.

Neuberger Berman Investment Advisers LLC is a registered investment adviser.

The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC.