The anticipation is high as the Bureau of Labor Statistics is set to release the September jobs report on Friday morning at 8:30 a.m. ET.
Analysts are expecting the report to reveal a continued slowdown in job growth in the United States. In August, the US economy added 187,000 jobs, but unemployment jumped to 3.8%.
Here’s what to look for in the upcoming report according to consensus estimates compiled by Bloomberg:
September Jobs Report: Key Numbers to Watch
- Nonfarm Payrolls: +170,000 vs. 187,000 previously – Economists are forecasting a decrease in the number of nonfarm payrolls added in September compared to August.
- Unemployment Rate: 3.7% vs. 3.8% previously – The unemployment rate is expected to drop slightly from the previous month, reflecting potential changes in the labor market.
- Average Hourly Earnings, Month-on-Month: +0.3% vs. +0.2% previously – Average hourly earnings are predicted to increase slightly on a month-on-month basis.
- Average Hourly Earnings, Year-on-Year: +4.3% vs. +4.3% previously – Year-on-year earnings growth is expected to remain steady.
- Average Weekly Hours Worked: 34.4 vs. 34.4 previously – Average weekly hours worked are projected to stay consistent.
Nancy Vanden Houten, lead US economist at Oxford Economics, commented, “We expect the September employment report to show a slight deceleration in job growth last month, but it will not be enough to take the risk of a rate hike at the November 1 Federal Open Market Committee meeting off the table.
We do expect the labor market to weaken later in the year as the economy slows in response to higher interest rates, tighter lending standards, and a pullback in consumer spending.”
Federal Reserve Chair Jerome Powell has also indicated the importance of a softening labor market to combat inflation. Powell has cautioned that a lack of continuous improvement could lead to rate hikes.
Signs of a Cooling Labor Market
Leading up to the release of the jobs report, several labor market indicators have hinted at a cooling job market. The ADP National Employment Report for September showed only 89,000 private payroll jobs added, falling short of economists’ expectations.
Wage data from ADP highlighted the narrowest margin between wage growth from job switching and staying in the same job since October 2020.
Additionally, the latest Job Opening and Labor Turnover Survey (JOLTS) revealed an increase in job openings at the end of August.
However, the quits rate and hiring rate remained at pre-pandemic levels in August, which could influence wage growth, closely monitored by the Federal Reserve.
As of Thursday evening, the markets are pricing in an 80% chance that the Fed will not raise rates at its next meeting, according to the CME FedWatch Tool.
Lydia Boussour, senior economist at EY, stated, “Softer private-sector job gains, easing wage growth, and the recent slowing in core inflation should provide enough comfort to the Federal Reserve to remain on pause in November, though policymakers will likely maintain a hawkish lean and reiterate the higher-for-longer policy approach.”
Crucial Implications for the Market
The September jobs report is arriving at a crucial time for the financial markets. Stocks have experienced a downturn due to rising yields and concerns of prolonged higher interest rates.
Some Wall Street strategists have suggested that weak data or a particularly negative jobs report could help alleviate the pressure on yields, which recently reached 16-year highs.
Investors and economists alike will be closely monitoring the September jobs report to gain insights into the health of the US labor market and its potential impact on monetary policy and financial markets.