Payrolls paint a bleak picture of the economy<\/p>\n
Kevin Ford<\/p>\n
In August, U.S. nonfarm payrolls increased by 22,000, which was considerably lower than the expected 75,000. Employment in health care and social assistance rose by about 47,000 in August. That\u2019s the smallest monthly increase since January 2022. It\u2019s arguably a big warning sign for the wider labor market given the sector has accounted for more than 40% of all new jobs over the last three years. The average workweek saw an unexpected decline to 34.2 hours, a potential indicator of weakening employer demand for labor. The unemployment rate climbed as anticipated to 4.3%, while the participation rate edged up to 62.3%. Downward revisions to previous months\u2019 data, including a negative print for June, the first since December 2020, further confirmed the soft jobs report. In response, the Treasury market extended its gains, with traders fully pricing in a 25 basis point rate cut for September, and the 2-year yield falling 8 basis points to 3.5%, lowest level since 2022. The US Dollar falls sharply on the news, as this print is worse than expected.<\/p>\n
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Unemployment rate hits highest since May 2016<\/p>\n
Kevin Ford<\/p>\n
According to Statistics Canada, Canada\u2019s job market is showing signs of significant weakness. In August, employment fell by 65,500, marking the second straight monthly decline, with most losses in part-time work. This pushed the unemployment rate up to 7.1%, the highest it\u2019s been since May 2016. The employment rate also dropped, continuing a downward trend seen since the start of the year. The biggest job losses were in professional, scientific and technical services, transportation and warehousing, and manufacturing, while construction saw an increase. The decline was widespread across provinces, with Ontario, British Columbia, and Alberta hit the hardest.<\/p>\n
The data has increased the odds of a rate cut by the Bank of Canada at its next meeting to 73% as of September 5. The Canadian dollar remains above 1.38 against the U.S. dollar, with the current rate hovering around 1.3808 CAD\/USD as of September 5, 2025. <\/p>\n
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Push for growth<\/p>\n
Kevin Ford<\/p>\n
The decline in Mexico\u2019s Gross Fixed Capital Formation (GFCF) in June 2025, with both monthly and annual decreases, points to a potential slowdown in business investment and economic confidence. GFCF is a key indicator of future productive capacity, as it measures the value of new investments in fixed assets like machinery, equipment, and construction. A decline suggests that businesses and the government are spending less on expanding their long-term productive capabilities. While GFCF remains historically high for the first quarter of the year, the recent monthly and annual contractions in both construction and machinery\/equipment purchases could signal caution among investors and a possible cooling of the economy.<\/p>\n
The decline in Mexico\u2019s Gross Fixed Capital Formation (GFCF) and the dovish monetary policy of the Banco de M\u00e9xico are two sides of the same economic coin. The GFCF data, which shows a decrease in business investment, is a key piece of evidence that supports the central bank\u2019s decision to cut interest rates. By lowering its reference rate to 7.75%, Banco de M\u00e9xico is actively attempting to stimulate the \u201csluggish domestic economy\u201d and counteract the \u201cslack conditions\u201d that are reflected in the declining investment numbers. In essence, the central bank\u2019s actions are a direct response to the very trend that the GFCF data highlights. While a decline in GFCF is a cause for concern on its own, it also provides the justification for the central bank\u2019s strategy to make borrowing cheaper, encourage new investment in fixed assets, and ultimately foster the robust and sustained growth that has been absent in recent data.<\/p>\n
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US Dollar drops on big payrolls miss<\/p>\n
Table: Currency trends, trading ranges and technical indicators<\/p>\n
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Key global risk events<\/p>\n
Calendar: September 1-5<\/p>\n
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All times are in EST.<\/p>\n