Hiring Shows Signs of Slowing

The U.S. job market showed weakness in July, adding just 73,000 jobs for the month - falling short of economists' expectations for 100,000 new positions. Meanwhile, combined downward revisions totaling 258,000 jobs for May and June sent a strong signal that the labor market is significantly weaker than initially believed.

"With nonfarm payroll revisions heavily concentrated in tariff-impacted sectors, the substantial downward adjustments now mark our 'living with stagflation' scenario becoming reality," wrote RBC economists in a report.

They noted stagflation dynamics are emerging as uncertainty surrounding Trump's trade policies is stifling hiring. The bank expects continued weakness in upcoming U.S. labor market data.

Service Prices Accelerating

The latest July figures showed the ISM Services Prices Paid Index, which measures what Americans pay for services, jumped to 69.9% from 67.5% in June.

Apollo Global Management Chief Economist Torsten Slk said this increase suggests inflation in the service sector is "heating up," potentially creating risks for broader inflation acceleration in coming months.

"Simultaneously, job growth is slowing while unemployment rises. This stagflation impulse stems from tariffs, migrant expulsions and dollar weakness. Most importantly, the stagflation theme in markets is intensifying," he added.

More Americans Filing Jobless Claims

U.S. initial jobless claims rose more than expected last week, another sign of economic softness. Labor Department data showed new claims surged to 226,000 in the week ending August 2, above the 221,000 economists predicted.

Meanwhile, continuing claims climbed to 1.97 million - the highest level of repeat filers since the COVID-19 pandemic began.