The US job market is expected to continue its gradual slowdown in September, with a predicted 150,000 new nonfarm payrolls and an unchanged unemployment rate of 4.2%. Wages are forecast to rise 0.3% month-over-month and 3.8% year-over-year, indicating a moderate pace of growth. This scenario would allow the Federal Reserve to continue lowering interest rates without worrying about falling behind the curve and risking a recession.
According to Katie Nixon, chief investment officer at Northern Trust Wealth Management, “The jobs market is slowing down and becoming less tight… The balance of power has shifted back to employers and away from employees, and that certainly will alleviate the wage pressure, which has been a key component of inflation.”
However, there is always a possibility of a surprise in the numbers, and monthly revisions can be significant. David Kelly, chief global strategist at JPMorgan Asset Management, notes that the actual number could be anywhere between 50,000 and 250,000.
The September jobs report will be closely watched by markets, as it will provide insight into whether the Fed can lower interest rates gradually or will need to make more drastic cuts. The report will also be the last “clean” reading before the presidential election, as the October report is expected to be affected by the dock workers’ strike and Hurricane Helene.
Despite the expected slowdown, the labor market remains solid, with job openings and quits rates trending lower. The ratio of available positions to unemployed workers has decreased to 1.1 to 1, and the quits rate hasn’t been lower since December 2014. According to Joseph Brusuelas, chief economist at RSM, “Whatever leverage labor had, [it] has dissipated or just eased as the economy’s normalized… So we’re going to have a lot less turnover.”
Overall, the September jobs report is expected to paint a picture of a labor market that is slowing down but still growing, with a delicate balance between wage growth and inflation concerns.
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