US employment data prompts markets to scale back September rate hike probability

A low-hire, low-fire labour market persists in the United States, but the mix is getting worse: labour demand is softening just as supply constraints keep inflation risks alive, writes KPMG US Chief Economist Diane Swonk.

Demand and supply of workers are falling in tandem in the United States (US), a toxic mix for the Fed. Payroll employment fell by 23,000 in July, after downward revisions to June. Private payrolls rose, but not enough to offset a 53,000 drop-in public-sector employment.  The losses in the public sector were concentrated in local education. Enrolments are falling, with 2026 marking the peak year for 18-year-olds. State and local government coffers are being squeezed by a slowdown in re...

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Authors: Diane Swonk

Published Date: 10 August 2026