Minneapolis
CNN Business
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When the Bureau of Labor Statistics releases its latest monthly jobs report on Friday, all eyes will be on whether the labor market is showing signs of loosening — one of several critical issues that will help the Federal Reserve decide its next move in combat. High inflation for decades.
The U.S. economy is forecast to have added 250,000 jobs in September, the lowest monthly job gain since December 2020. The unemployment rate is expected to remain at 3.7%, according to Refinitiv estimates.
August jobs data indicated that the historically tight labor market loosened to a degree. That month’s jobs report showed the U.S. added 315,000 jobs, significantly less than the average job gain of 512,000 over the previous 12 months. The number of job openings fell by 1.1 million, the biggest monthly decline outside of the pandemic, according to the Job Vacancy and Labor Turnover Survey released Tuesday.
While initial applications for weekly jobless benefits hung at a four-month low, filings came back on Thursday. first time Unemployment insurance claims totaled 219,000 for the week ended Oct. 1, up 29,000, or 15 percent, from last week’s revised level of 190,000, according to new data from the Labor Department.
The weekly initial jobless claims numbers are initial and often subject to significant revisions. Continued claims for the week ended September 24 were 1.36 million, an increase of 15,000 from last week’s revised level.
Job cuts have been on the rise in recent months, according to the latest report from turnaround firm Challenger, Gray and Christmas. In September, US businesses announced plans to cut 29,989 jobs, a 46 percent increase from August and a 68 percent increase from a year earlier. The retail industry accounts for about a third of those cuts, Challenger said.
“Some cracks are starting to appear in the labor market. Hiring is slowing and events are starting to decrease,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement.
But while the number of anticipated headline jobs is declining, it’s still strong, BLS data show. The monthly average before the pandemic was around 200,000.
The September employment report is expected to show average hourly earnings growth slowed to 5.1% in September from 5.2% in August. The Fed will be watching closely to see if a decline in demand for workers will dampen wage growth, or if wage gains will put more pressure on higher inflation.
“The job market went up to 11 last year and now it’s up to 9,” said Nick Banker, head of economic research at the Indeed Hiring Lab. “Things have slowed down, but it’s still pretty loud.”
The Fed’s desire for a soft landing — to ease inflation without tipping the economy into recession — has become increasingly unrealistic.
As a result, the Fed has shifted to a “no pain” approach in its fight against inflation, which means the unemployment rate could rise from 3.7% to at least 4.4% by the end of next year, according to central bank data. own predictions. Assuming no change in the number of people participating in the labor force, a jump in unemployment would cause at least 1.2 million workers to lose their jobs, according to CNN Business BLS data.
Even if more workers join the workforce, it may not be enough to maintain that balance, economists warn.
“It would be nice to have this soft landing. [job] “Jobs have done all the work and inflation has done all the work and there’s very little economic pain,” said Alex Pell, US economist at Mizuho Securities. That’s certainly possible, but I don’t think that’s a likely outcome.
Despite persistent, sky-high demand for workers — especially in industries affected by the pandemic and the rapid recovery that ensued — labor force participation rates remain stubbornly below pre-pandemic levels.
That’s largely due to ongoing demographic trends, including the massive Baby Boomer generation aging out of the workforce, retirements during the pandemic and other factors such as caregiving, health and restrictive immigration policies.
The unemployment rate is likely to rise, though. These lower demographic pressures, and that can also come from people losing their jobs.
“It can be a really slow grind,” Pele said.
The September jobs report is among the key economic data Fed policymakers will review when they meet in early November to discuss how to curb stubbornly high inflation. So far, the Fed has been raising rates by implementing a series of punitive rate hikes.
