- The US government released the latest non-farm payroll report this Tuesday.
- The November data reflected the highest unemployment rate in over 4 years, or since September 2021.
Non-Farm Payroll Rises, But Unemployment Jumps
According to the US Bureau of Labor Statistics (BLS), non-farm jobs increased by 64,000 in November. The figures significantly outperformed analysts’ 40,000-50,000 forecast range.
On the other hand, the tally showed unemployment rising to 4.6% in the same month, suggesting weakness in the labor market. The scenario justified the US Federal Reserve’s decision to continue cutting the interest rates by 25 basis points this December to jumpstart the struggling jobs market.
The report, however, didn’t include the actual numbers for October 1 through November 12 due to the 43-day government shutdown. Nonetheless, the BLS used a statistical weighting process to address the gap, resulting in an estimated 105,000 job losses in October.
Additionally, the report indicated that US President Donald Trump’s workforce cuts accounted for much of the October job losses.
Fed Pressure for More Rate Cuts
James Knightley, Chief International Economist at ING US, stated that the slow job creation and rising unemployment will continue to drive a dovish approach from the Fed. If the trend continues, it will pressure the central bank to further cut down interest rates at the next Federal Open Market Committee (FOMC) meeting on January 28 to 29 in the coming year.
The economist believes that the mid-term elections will amplify calls for the Fed to lower the rates. Additionally, a pessimistic outlook for the jobs market could prompt further cuts by March and June.
What It Means for the Crypto Market
CoinMarketCap’s analytics tool blamed the recent slump in Bitcoin from $87K to $85K in the last 24 hours as a risk-averse response to the weak US jobs data and Fed rate cut bets. However, it’s worth noting that the thinning liquidity in the crypto market also likely contributed to BTC’s decline.
Bitcoin notably breached its $88K support level during that timeframe, triggering automated selling. As of Tuesday afternoon (UTC), BTC liquidations from leveraged positions have already gone over $136 million (consisting of $107 long and $29 million short positions) based on Coinglass data.
Meanwhile, Bitget sees a dual impact on the crypto market by the weak non-farm payrolls and data distortion caused by the information blackout during the government shutdown. On one hand, it expects earlier rate-cut expectations to provide medium-term support for BTC and other risk assets. On the other hand, the data uncertainty may catalyze short-term volatility in interest rates, the US dollar, and the crypto market. The latter could make leveraged funds more susceptible to liquidations.
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