Attendees at the Albany job fair in Latham, New York, United States, Wednesday, October 2, 2024.
Angus Mordants | Bloomberg | Getty Images
Employment conditions in September are expected to be very similar to August – hiring is gradually slowing, wages are rising slightly, and the labor market is looking a lot like many policymakers had hoped.
According to the Dow Jones consensus, nonfarm payrolls are expected to increase by 150,000 from 142,000 last month, with the unemployment rate holding steady at 4.2%. On the wage front, wages are expected to grow 0.3% monthly and 3.8% annually – the same annual rate as August.
If the data are as expected, they will be close to the sweet spot, allowing the Fed to continue lowering interest rates without feeling the urgency of potentially falling behind the curve and risking a recession.
“The job market is slowing down and becoming less tight,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “The balance of power has shifted back to employers and away from employees, which will certainly reduce wage pressures, and Wage pressure has been a key component of inflation for some time now and that’s what we’re trying to address.
Of course, there’s always the possibility that the numbers could surprise significantly upward or downward. Additionally, monthly revisions can sometimes be so sharp that the Labor Department overestimated hiring by more than 800,000 in the 12-month period ending in March 2024, adding to the uncertainty of job market analysis.
David Kelly, chief global strategist at JPMorgan Asset Management, said: “While we expect to add 150,000 jobs, I would not be surprised if it increased to 50,000; I would not be surprised if it increased to 250,000. “I don’t think people should be too scared about that number. “
The Bureau of Labor Statistics will release the report at 8:30 a.m. It became the last “clean” report before Election Day.
looking for clues
Still, the market will actually be watching the report closely.
Specifically, they will be looking for signs of whether the Fed can gradually ease policy and lower interest rates in a manner more consistent with previous easing cycles, or whether it must repeat previous easing policies. A massive half-percentage point interest rate cut was implemented in September.
At the same meeting where they approved the rate cut, policymakers said they would cut rates by another half percentage point, or 50 basis points, by the end of 2024 and by a full percentage point in 2025. .
“A strong number wouldn’t really change their stance,” JPMorgan’s Kelly said. “A weak number might tempt them to cut rates by another 50 basis points.”
However, Kelly said the Fed is more likely to view employment as a “mosaic” rather than just a single data point.
The bigger picture
Labor market indicators have been trending downward over the past few months, but are far from falling off a cliff. Manufacturing and services surveys showed hiring slowing, while Federal Reserve Chairman Jerome Powell described the labor market as stable but weak earlier this week.
Excluding a brief dip when the coronavirus pandemic hit, this was the last monthly decline hiring rate The unemployment rate was 7.2% in October 2013, and this summer’s level was 3.3% of the labor force in June and August, according to Labor Department data.
Job vacancies has also fallen, bringing the ratio of available jobs to unemployed workers to 1.1 to 1, down from 2 to 1 a few years ago.
However, there is a kind of stagnation in the labor market, which not long ago was struggling with the “Great Resignation” as workers left their jobs believing they could find better jobs elsewhere.
Excluding the fluctuations of the epidemic in 2020, Quit smoking rate It has not fallen below its current level of 1.9% since December 2014, while turnover rateEven including Covid, the last time it was lower than the current 3.1% was December 2012.
“Whatever the leverage of labor, it has disappeared or just weakened as the economy normalized,” said Joseph Brusuelas, chief economist at tax advisory firm RSM. “So our top line will be It’s going to be significantly reduced. We’re seeing that in our business.”
Still, if someone had told Brussoulas four years ago during the Covid turmoil that the economy would now be adding nearly 150,000 jobs a month and the unemployment rate would be in the low 4% range, he would have said, ” I’ll buy you a steak dinner”.
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