What to expect from Friday’s jobs report

CNN Business

When the U.S. Bureau of Labor Statistics releases its latest monthly jobs report Friday morning, all eyes will be on whether the labor market is showing signs of loosening — one of many key factors helping the Fed determine its next steps in the fight Decades of high inflation.

The U.S. economy is expected to add 250,000 jobs in September, which would be the weakest monthly job gain since December 2020. The unemployment rate is expected to hold steady at 3.7%, according to Refinitiv estimates.

Employment data for August already suggests that the historically tight labor market has loosened a notch. That month’s jobs report found the U.S. added 315,000 jobs, well below the 512,000 average for the past 12 months. The number of open positions also fell by 1.1 million, the largest monthly decline outside of the pandemic, according to the Job Openings and Labor Turnover Survey released on Tuesday.

While initial claims for weekly jobless benefits have hovered near a four-month low, filings picked up again on Thursday.the first time Unemployment insurance claims totaled 219,000 for the week ended Oct. 1, up 29,000, or 15%, from last week’s revised 190,000, according to new data released Thursday morning by the U.S. Department of Labor.

The weekly initial jobless claims are preliminary and usually subject to major revisions. Continuing claims for unemployment benefits for the week ended Sept. 24 were 1.36 million, up 15,000 from the previous week’s revised level.

According to the latest report from employment agency Challenger, Gray & Christmas, the trend of layoffs has been increasing in recent months. In September, U.S. companies announced plans to cut 29,989 jobs, a 46% increase from August and nearly 68% higher than a year earlier. The challenger said the retail sector accounted for nearly a third of the layoffs.

“The labor market is starting to show some cracks. Hiring is slowing and layoffs are starting to happen,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement.

However, the BLS data showed that while the much-anticipated overall payroll was falling, it was still strong. The monthly average before the pandemic was around 200,000.

The September jobs report is also expected to show that average hourly earnings growth has slowed to 5.1% in September from 5.2% in August. The Fed is closely watching whether slowing demand for workers also dampens wage growth, or whether wage increases remain high, putting upward pressure on inflation.

“The labor market was 11 last year, and now it’s 9,” said Nick Bunker, director of economic research at Indeed Hiring Lab. “It’s down a bit, but it’s still loud.”

The Fed’s goal of a soft landing — cooling demand to ease inflation without tipping the economy into recession — is becoming increasingly unrealistic.

As a result, the Fed’s move to a “no-ear” approach in the fight against inflation could mean unemployment climbs from 3.7% to at least 4.4% by the end of next year. own predictions. Assuming no change in the number of people participating in the labor force, a rise in unemployment would put at least 1.2 million workers out of work, according to CNN Business calculations of BLS data.

Economists warn that even adding more workers to the workforce may not be enough to balance that.

“It would be great if we could achieve a soft landing [job] Opening up did all the work, inflation expectations did all the work, and there was little economic pain,” said Alex Peller, U.S. economist at Mizuho Securities. “It’s certainly possible, but I don’t think it’s a likely outcome. ”

Despite continued high demand for workers — especially in industries hit by the pandemic and subsequent sharp recovery — labor force participation remains stubbornly below pre-pandemic levels.

This is largely due to ongoing demographic trends, including an aging workforce among a large number of baby boomers, accelerated retirements during the pandemic, and others on the sidelines for reasons such as nursing, health and restrictive immigration policies.

Although unemployment may have to rise These declining population pressures are likely to come from people who have lost their jobs.

“It could really be a slow break-in,” Pell said. “It’s not going to be a happy process. It’s not going to be a painless slow grind.”

The September jobs report is one of the key economic data that Fed policymakers will review when they meet in early November to discuss how to rein in stubbornly high inflation. So far, the Fed has responded to soaring prices by implementing a series of punitively high interest rates.

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