September US Jobs Report: Will the Fed Cut Rates Next Month?
The delayed Nonfarm Payrolls (NFP) statistics for September will be released by the US Bureau of Labor Statistics (BLS) on Thursday. In order to gain a clear understanding of the state of the job market, US dollar (USD) traders are looking forward to the September employment data. Additionally, they are searching for hints as to whether the US Federal Reserve (Fed) will cut interest rates next month.
After rising by a pitiful 22,000 in August, economists predict that nonfarm payrolls will increase by 50,000 in September. During the same time frame, the Unemployment Rate (UE) is probably going to level off at 4.3%. A frequently monitored indicator of wage inflation, Average Hourly Earnings (AHE), is predicted to increase by 3.7% year over year (YoY). This would be comparable to the August pace.
Job gains likely rebounded to 100K in September, supported by private NFP increasing 125K. Government jobs likely declined 25K. We also look for the UE rate to go sideways at 4.3% as layoffs remain subdued. AHE likely moderated to 0.2% MoM (3.6% YoY),
TD Securities analysts
Fed’s Cautious Tone Boosts Dollar as NFP Looms
The US dollar has reversed its decline versus its main currency competitors from the previous week. As it prepares for the NFP showdown, it has made a remarkable comeback. Expectations of another interest rate cut by the central bank in December have been lowered due to a recent wave of cautious Fed remarks and poor US private sector job data. In particular, there is less chance of a 25 basis point (bps) decrease.
Regarding how to strike a balance between inflation risks and a softening labor market, Fed policymakers are still at odds. They demand caution when it comes to further relaxing monetary policy as a result. On Wednesday, the minutes of the monetary policy meeting in October were made public. They demonstrated how policymakers warned that the battle against inflation would be jeopardized by decreasing borrowing costs. According to CME Group’s FedWatch Tool, the likelihood of the Fed lowering interest rates in December dropped to 33% after the minutes were made public. Prior to the conference, this rate was about 50%; a week ago, it was 65%.
US Jobs Data Highlights Labor Market Strain Ahead of Fed Decision
The Automatic Data Processing (ADP) Employment Change report was published on November 5 in terms of economic data. It revealed that US private payrolls grew by 42,000 jobs in October, above forecasts of a 25,000 increase. In the meantime, companies reported a monthly increase in layoffs of 183.1%, according to statistics released on November 6 by the executive outplacement company Challenger, Gray & Christmas. This was the worst October for layoffs in more than 20 years, according to Reuters. In conclusion, markets are eagerly awaiting the September employment report, despite its staleness, amid rising US economic and labor market fears. In order to predict the direction of the Fed’s interest rates in the upcoming months, traders look to it.
Even as the September Nonfarm report will be somewhat dated, it may be the final full employment report the Fed has in hand ahead of its December monetary policy meeting,
Wells Fargo’s
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