Ahead of the FOMC September meeting, the labor market shows signs of weakness, supporting a dovish stance on interest rates. The latest JOLTS report, reflecting July data, revealed a drop in job openings to 7.18 million, below the anticipated 7.4 million, indicating a negative jobs-workers gap for the first time since the pandemic. This suggests labor market slack which, if it worsens, could escalate the unemployment rate. The ADP employment data also came in lower than expectations, further supporting the case for a forthcoming rate cut. Additionally, the Challenger Survey indicated a 13% year-over-year increase in layoffs, a significant marker as it indicates layoffs are now 105% above pre-Covid levels for August. Despite the forthcoming NFP report, the current labor market data aligns with expectations for the Federal Reserve's potential interest rate cut this September.

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