Here’s what to expect when the September jobs report is released on Friday

September’s jobs picture is expected to be similar to August’s – a modest decline in employment, modest wage increases and a labor market that looks the way many policymakers had hoped.

Nonfarm payrolls are expected to show an increase of 150,000, from 142,000 last month, with an ongoing unemployment rate of 4.2%, according to the Dow Jones consensus. On the wages side, the forecast is for a monthly gain of 0.3% and an increase of 3.8% over last year – the annual rate is the same as in August.

If the numbers come in as expected, they will come close to the sweet spot that allows the Federal Reserve to continue lowering interest rates without the sense of urgency that it could be behind the curve and risk triggering a recession.

“The job market is getting tighter and tighter,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “The balance of power has shifted back to employers and away from workers, and that will reduce the pressure on wages, which has been an important part of inflation. We’ve been working together for a while, and this is what a soft landing looks like.”

Of course, there is always the possibility of a big surprise or the opposite of the numbers. Then there are the sometimes surprising monthly updates, which have caused the Labor Department to skip hiring by more than 800,000 in the 12 months to March 2024, adding uncertainty to the labor market analysis.

“While we’re still looking at 150,000 job additions, I wouldn’t be surprised if it came in at 50,000 and I wouldn’t be surprised if it came in at 250,000,” said David Kelly, chief global strategist at JPMorgan Asset Management. “I don’t think people should worry too much about this number.”

The Bureau of Labor Statistics will release the report at 8:30 a.m. Although there will be another count of nonfarm payrolls ahead of next month’s presidential vote, the October report is expected to be skewed by a strike by factory workers and Hurricane Helene. – making September the last “clean” report before Election Day.

However, markets will actually be watching this report closely.

Specifically, they will be looking for clues as to whether the Fed will be able to ease policy and lower interest rates gradually in line with previous tapering cycles, or whether it will have to repeat interest rates a fraction of a point above the cut-off point. launched in September.

At the same meeting where they approved the cuts, policymakers indicated another half percentage point, or 50 points, in reductions before the end of 2024 and another full percentage point in 2025. Markets, though, price on an aggressive schedule.

“A strong figure would not have changed its position,” JPMorgan’s Kelly said. “A weaker number can weigh another 50 points.”

However, Kelly said the Fed is more likely to look at the employment picture as a “mosaic” rather than individual data.

For the past few months, labor market indicators have been declining, although they are far from falling off a cliff. A survey of the manufacturing and services sector showed less employment, while Fed Chairman Jerome Powell earlier this week described the labor market as strong but softening.

Apart from a short drop at the beginning of the Covid pandemic, the last time the monthly employment rate was the level seen this summer – 3.3% of the workforce in June and August – was in October 2013 when the unemployment rate was 7.2%. according to the Ministry of Labor.

Job openings also decreased and reduced the ratio of available positions to unemployed workers to 1.1 to 1, from 2 to 1 a few years ago.

However, a kind of stasis has reached the labor market in the recent past with “mass resignations” as workers are convinced they can get better deals elsewhere and leave their jobs in droves.

Without the pandemic in 2020, the dropout rate has not been lower than its current 1.9% since December 2014, while the dropout rate, even with Covid, was last lower than the current 3.1% in December 2012.

“Whatever important work, [it] has disappeared or declined as the economy normalizes,” said Joseph Brusuelas, chief economist at RSM. “So we will have very little profit. We see it in our business. We hear it from our customers.”

Still, if someone had told Brusuelas back during the Covid chaos four years ago that the economy would add nearly 150,000 jobs a month now with an unemployment rate in the low 4% range, he said, “I would have bought you dinner. .”