In the United States, all eyes are on the forthcoming employment report set to be unveiled on Friday.
This eagerly anticipated report will shed light on the state of the labor market throughout September, potentially influencing Federal Reserve officials’ decision-making regarding future interest rate adjustments.
Scheduled for release at 8:30 a.m. (1230 GMT), the report’s findings are based on surveys conducted before a recent United Auto Workers strike, which could have swayed the results.
Economists surveyed by Reuters anticipate that the economy added approximately 170,000 jobs in September, slightly surpassing the 150,000 monthly pace of the previous three months.
Furthermore, they predict a marginal decrease in the unemployment rate, from 3.8% to 3.7%.
This data, coupled with a surprising surge in job openings in August, might leave policymakers grappling with an unresolved policy debate.
]The economy continues to confound expectations by displaying above-trend growth, even as many economists anticipate a modest slowdown later in the year.
During its September meeting, the Federal Reserve opted to maintain the target federal funds rate within the range of 5.25% to 5.5%. The next policy meeting is scheduled for October 31 to November 1.
Nancy Vanden Houten, the lead U.S. economist at Oxford Economics, suggests that the Fed may want to see more signs of a cooling labor market than anticipated.
She expects the economy to have added 180,000 jobs in September, a slight dip from the 187,000 in August, but still close to the pre-pandemic monthly average from 2010 to 2019.
Despite these predictions, Vanden Houten believes that wage gains may prove to be stronger than the previous month.
This suggests that the labor market remains relatively robust, potentially opening the door for an additional interest rate hike, even though market consensus leans toward no further increases.
This year has seen a surprising combination of steady job growth and consistently low unemployment rates.
This defied expectations that the rapid rate hikes seen over the past year and a half would substantially slow demand, economic growth, and hiring.
However, this summer witnessed a slowdown in labor market activity, with three-month average job gains declining from over 330,000 in January to 150,000 from June to August.
Furthermore, wage gains have also experienced a deceleration.
Fed officials, analyzing these details, have gained confidence that the labor market, once characterized by reduced participation and mass quitting during the early stages of the pandemic, has started to resemble its pre-pandemic state.
Key indicators such as quit rates have returned to near pre-pandemic levels, and the number of job openings for each unemployed individual has declined significantly.
Data since the September Fed meeting has also shown a faster-than-expected slowdown in underlying inflation, possibly impacting future rate hike projections.