US Nonfarm Payrolls Report

The latest US nonfarm payrolls report on Friday is highlighted in the economic calendar this week.

Economists expect the US economy to add 144,000 jobs in September, slightly up from 142,000 in the previous month. The unemployment rate is projected to match August’s level of 4.2%.

In August, payrolls rose from a heavily downwardly revised reading of 89,000, which was below the forecast of 164,000. The jobless rate ticked down from 4.3%. These numbers indicate a downshift in labor demand, identified by several Federal Reserve officials as a key factor in their decision to announce a 50-basis point interest rate reduction last month.

Analysts at ING argued that the jobs market continues to hold “the key to the pace” of potential upcoming interest rate cuts, especially as inflation shows signs of abating.

“If we get the unemployment rate rising back to 4.3% next Friday and a sub 75,000 payrolls print, expect calls for a second 50 basis point rate cut to grow markedly,” the ING analysts stated.

Fed Chair Jerome Powell signaled that the central bank would likely opt for more traditional quarter-point interest rate cuts moving forward, but emphasized that the future path of borrowing costs is not predetermined.

Powell stated that the Federal Open Market Committee is not “in a hurry to cut rates quickly” despite the recent significant drawdown at its September meeting. He defended the decision, asserting that it reflected the FOMC’s growing confidence that an appropriate recalibration of policy could maintain strength in the labor market amid moderate economic growth and declining inflation towards 2%.

On Tuesday, US job openings unexpectedly increased slightly in August, suggesting some resilience in cooling labor demand during the third quarter. The closely-monitored Job Openings and Labor Turnover Survey showed that available positions rose to 8.040 million on the last business day of August, up from a revised total of 7.711 million in July. Economists had predicted the JOLTS report would dip marginally to 7.640 million.

In July, job openings slipped to their lowest mark in three-and-a-half years, seen as a potential sign that the US job market was losing steam in an orderly fashion.

What do you believe the nonfarm payrolls number will be for September? How will markets react to the report? Share your opinion in Investing.com’s poll on X.