The August jobs data, which is due out Friday morning, could reveal that the US labour market’s expansion slowed down even more.
According to consensus forecasts provided by Bloomberg, the BLS’s monthly labour report, which will be released at 8:30 a.m. ET, is anticipated to indicate that nonfarm payrolls increased by 170,000 in August while the unemployment rate held unchanged at 3.5%. While the unemployment rate decreased to 3.5% in July, the US economy created 187,000 new jobs.
According to information from Bloomberg, these are the crucial figures Wall Street will be examining:
Big data indicators show steady but typically slowing employment growth, and August payrolls have shown a negative bias in the initial prints (subsequently revised higher in each of the previous five years),” noted Jan Hatzius, the chief economist at Goldman Sachs, in a note published ahead of the release. The combination of Hollywood worker strikes (-18K) and Yellow trucker layoffs (-8K) results in a 26K one-time drag, according to our projection.
Jerome Powell, the chair of the Fed, said last week that the rebalancing of the labour market was “incomplete.” Powell has emphasised numerous times that “some softening in labour market conditions” will be necessary to bring inflation back down to the Fed’s target rate of 2%.
In a speech at the Jackson Hole Economic Symposium, Powell stated, “We expect this labour market rebalancing to continue.” “Evidence that the labour market tightness is no longer easing could also call for a monetary policy response.”
Early indications from other economic statistics suggest that the US economy may be slowing down following a stronger-than-expected summer since Powell’s address.
Private companies added 177,000 jobs in August, a considerable decrease from the 371,000 positions added in July, according to new ADP statistics released on Wednesday. The most recent Job Opening and Labour Turnover Survey, or JOLTS report, released on Tuesday revealed that for the first time in more than two years, the number of job opportunities in July fell below 9 million. Additionally, a study of consumer confidence found that Americans are becoming more cautious about the labour market.
All of those data indicators were weaker than predicted by analysts surveyed by Bloomberg, increasing the odds that the Federal Reserve would decide to keep interest rates unchanged at its September meeting. The likelihood that the Fed won’t raise rates at its upcoming meeting has increased from 78% to over 90% in the markets.
According to Oxford Economics’ head US economist Nancy Vanden Houten, “along with other signs of loosening labour market conditions, an August jobs report in line with expectations will allow the Fed to hold interest rates steady at the September 20 policy meeting.”