Heungkuk Securities: "US Employment Slows... Rate Cut Cycle Likely to Accelerate"

Heungkuk Securities projected on September 11 that, as the deterioration in the US labor market has now been officially confirmed, there is a growing possibility that the interest rate cut cycle will be brought forward.

On September 9 (local time), the US Department of Labor released preliminary results adjusting the estimates of the Current Employment Statistics (CES) to reflect the Quarterly Census of Employment and Wages (QCEW). It was confirmed that, from April 2024 to March 2025, the number of nonfarm payroll jobs was revised down by 911,000 compared to previous announcements. This means that the actual monthly increase in employment was only 76,000, about half of the previously reported average of 147,000 per month.

Kim Jinseong, a researcher at Heungkuk Securities, explained, "The adjustment rate is nearly three times higher than the average annual benchmark revision of 0.2% over the past decade," adding, "This signals a significant downward revision for the second consecutive year, following last year."

Looking at the employment adjustment results by industry, not only was a decline in employment confirmed in sectors such as mining, construction, and automotive manufacturing, but even service sector jobs-which had maintained relatively strong employment growth during the adjustment period and up to recent months-were also revised down by a considerable margin. He stated, "Although conditions in the service sector remain relatively favorable compared to production jobs, it appears that employment is retreating across all industries."

He further emphasized, "Such adjustments ultimately undermine the Federal Reserve's justification for delaying interest rate cuts, raising expectations that the rate cut cycle will accelerate going forward." He added, "While an increase in tariffs will inevitably lead to higher inflation, the actual extent of the increase was lower than feared, uncertainty has eased through trade agreements, the labor market is weakening, and there is now evidence that employment weakness has already been underway."