Moderate US job growth slowdown expected in September

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Macro Matters

Moderate US job growth slowdown expected in September

By Lucia Mutikani
October 6, 2023 12:02 AM EDT • Updated 6 hours ago

Summary
• Nonfarm payrolls forecast to increase 170,000 in September
• Unemployment rate seen dipping to 3.7% from 3.8%
• Average hourly earnings forecast rising 0.3%; up 4.3% y/y

WASHINGTON, Oct 6 (Reuters) - U.S. job growth likely slowed moderately in September while the unemployment rate probably retreated from a 1-1/2-year high, underscoring the economy's underlying strength amid rising headwinds as the year winds down. ... The Labor Department's closely watched employment report on Friday is also expected to show wage gains remaining elevated. Eighteen months after the Federal Reserve started raising interest rates, the labor market is only gradually easing.

Labor market resilience, which is underpinning demand in the economy, raises the risk that the U.S. central bank could hike rates again by year end. Most economists believe it is done raising rates, but will rather keep monetary policy tight for some time. ... "While payroll growth is much slower than in previous years, it doesn't look like it's falling off a cliff," said Nick Bunker, research director at the Indeed Hiring Lab in Tampa, Florida. "If we see another number in excess of 100,000 jobs a month, that's another sign that the labor market is moderating, but continues to have a lot of strength and resilience."

Nonfarm payrolls likely increased by 170,000 jobs last month after rising 187,000 in August. While that would be the fourth straight month of employment gains below 200,000, payrolls would be well above the roughly 100,000 per month needed to keep up with growth in the working-age population. Payrolls are around averages that prevailed before the COVID-19 pandemic.

Some economists believe payrolls could surprise on the upside, noting that first-time applications for state unemployment benefits dropped in September to the lower end of their 194,000-265,000 band for this year.

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Bloomberg

European stocks edge higher before US jobs data: Markets Wrap

John Viljoen
Fri, October 6, 2023 at 4:14 AM EDT

(Bloomberg) — European stocks rose as traders prepared for a US payrolls report forecast to show employers slowed hiring last month, potentially easing pressure on the Federal Reserve to raise interest rates again.

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The nonfarm payrolls report will show US employers hired 170,000 workers last month, down from 187,000 in August, a Bloomberg survey showed. Job data earlier this week provided a discordant narrative: job-openings overshot estimates, while a measure of private employment from ADP was weaker than forecast.

“Although both numbers haven’t been moving in tandem recently, the lower-than-expected ADP figures have given markets hope that September nonfarm payrolls will surprise to the downside,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “Beyond the number of job creations, investors will pay close attention to wage growth figures and whether they confirm recent disinflationary trends.”

Treasury yields extended their advance, with the 10-year adding two basis points to 4.74% after reaching 4.88% earlier this week. A gauge of dollar strength was little changed. ... “Friday’s payrolls data, and next week’s inflation number, will decide whether the 10-year Treasury yield goes up to 5% or down to 4.5%,” said Kenneth Broux, a strategist at Societe Generale in London. A higher-than-forecast jobs number may trigger “another wave of dollar-buying and bond-selling,” he said.

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