September’s employment outlook is anticipated to mirror that of August, with a gradual deceleration in hiring compared to earlier in the year, a slight uptick in wages, and a labor market aligning with policymakers’ expectations.
Projections suggest nonfarm payrolls will grow by 150,000, up from the previous month’s 142,000, while the unemployment rate is expected to hold steady at 4.2%. Wage forecasts indicate a 0.3% monthly increase and a 3.8% rise from a year ago, mirroring August’s annual rate.
If the data aligns with expectations, it would provide a favorable scenario for the Federal Reserve to continue lowering interest rates without a sense of urgency to prevent a recession.
Katie Nixon, Chief Investment Officer at Northern Trust Wealth Management, noted that the job market is slowing down and becoming less competitive for employees, which could alleviate wage pressures that contribute to inflation.
While there is potential for significant deviations from the projected numbers, monthly revisions have been known to introduce uncertainty, with past instances of overcounting hiring by the Labor Department.
The release of the report by the Bureau of Labor Statistics is eagerly awaited, with the October report expected to be influenced by external factors, making September’s report the last “clean” one before the upcoming election.
Market observers will closely analyze the report for insights into the Fed’s future policy decisions regarding interest rates and easing cycles, with expectations varying between gradual adjustments and more aggressive cuts.
Despite fluctuations in labor market indicators, the overall trend has been a gradual decline in hiring, with recent data indicating a stable but softening labor market. Job openings have decreased, leading to a lower ratio of available positions to unemployed workers compared to previous years.
The labor market has transitioned from a period of high turnover during the “Great Resignation” to a more stable phase, with reduced leverage for workers seeking better opportunities elsewhere.
Joseph Brusuelas, Chief Economist at tax consultancy RSM, highlighted the normalization of the economy, resulting in decreased turnover and a more subdued labor market compared to the tumultuous period during the pandemic.
Reflecting on the current state of the economy, Brusuelas expressed surprise at the resilience shown in job creation and the decline in unemployment rates, indicating a significant shift from the uncertainties of the past.
