What's going on?

Data out Friday showed the US economy added fewer jobs than expected last month � but left the ball in the Federal Reserve�s (the Fed�s) court when it comes to future interest rate movements…

What does this mean?

After solid hiring numbers in June and July, August�s 130,000 new non-farm American jobs disappointed economists. Even a temporary boost from the government � which hired 25,000 people ahead of next year�s census (when it plans to hire half a million helpers) � wasn�t enough to stop 2019�s average monthly job growth slipping a full 65,000 lower than in 2018 (tweet this).

Investors are convinced America�s central bank will shortly cut interest rates again in order to boost the economy. But the Fed keeps getting mixed messages. Unemployment has been sitting at or under 4% for 17 months, while August�s annual wage growth was slightly higher than predicted at 3.2%. And despite the US manufacturing sector unexpectedly shrinking last month, services sector growth was strong. Combined with robust consumer spending, there�s a chance inflation could yet pick up � potentially wrongfooting a freshly shorn Fed.

Why should I care?

For markets: Trade is the great unknown.
Factoring the uncertainty of US trade policy into interest rate considerations is a �new challenge� for the Fed � especially as it lacks any control over it. And while trade talks may be restarting in October, China isn�t gambling on a deal. The Middle Kingdom introduced further economic stimulus measures on Friday, loosening bank reserve requirements for the third time this year and freeing up $126 billion of lending to boost the country�s economy.

The bigger picture: It could be worse.
The US economy grew 2.1% last quarter. That�s the sort of growth the eurozone can only dream of: data confirmed on Friday its economy grew only 0.2% in the same period. Germany�s national economy, the bloc�s largest, contracted 0.1% � and shrinking July factory production data released on Friday, likely exacerbated by the US-China trade war, suggests recession ist bevorstehend.