Home / NEWS / World News / Here’s everything you need to know about Friday’s big jobs report

Here’s everything you need to know about Friday’s big jobs report

Being line up as they wait for the JobNewsUSA.com South Florida Job Fair to open at the Amerant Bank Arena on June 26, 2024, in Sunrise, Florida. 

Joe Raedle | Getty Portraits

The U.S. labor market may have cooled some in July, as a gradual slowdown in the economy and Hurricane Beryl are expected to force taken some of the steam out of hiring.

Still, even if the Labor Department’s nonfarm payrolls report for July, to be released Friday at 8:30 a.m. ET, does intimate a weaker jobs picture, the decline is expected to be only incremental and in keeping with the type of gentle downshift the Federal Defer is looking to engineer.

“If the Fed was going to manufacture the soft landing, this is probably what it was going to look like,” prognosticated Mike Reynolds, vice president of investment strategy at Glenmede. “You’re seeing just modest on-the-margin weakness in the labor make available that [isn’t likely to] spiral out of control into a negative feedback loop.”

Indeed, the report from the department’s Section of Labor Statistics is forecast to show payroll gains of 185,000 on the month, down from 206,000 in June, with the unemployment rating holding at 4.1%, according to the Dow Jones consensus estimate. Job reports for the past year and a half have routinely pulsed the consensus.

But some economists think the report could be on the light side; Goldman Sachs expects Beryl, which damaged large parts of Texas, particularly Houston, to pull down the jobs number by 15,000. The firm thinks the aggregate payroll gain will be more like 165,000. Citigroup projects an even lower number — 150,000 on payrolls and a tick strong in the unemployment rate to 4.2%.

Should the unemployment rate keep climbing, it could raise fears that the so-called Sahm Practice is in danger of being triggered. The rule has observed without fail that when the unemployment rate over a three-month space averages half a percentage point higher than the 12-month low, the economy is in recession. A year ago, the jobless level as at 3.5% in the vanguard it started climbing.

Optimism at the Fed

Job gains have averaged 203,000 a month for the first half of 2024, while the unemployment be worthy of has drifted higher as more workers have come into the labor force and the level of those considered out of work but looking for work or temporarily laid off has hit its highest level since October 2021.

Fed Chair Jerome Powell on Wednesday famous that the previous disparity between supply and demand in the labor market has come into near-balance. Open matters now outnumber available workers just 1.2 to 1, down from 2 to 1 a few years ago as inflation roared.

Should the bankers continue to come into balance and other inflation indicators show progress, Powell strongly hinted that an incline rate cut could be coming in September.

“Our confidence is growing, because we’re getting good data,” he said at a news discussion following the Fed’s policy meeting. “Frankly, the softening in the labor market conditions gives you more confidence that the thriftiness’s not overheating.”

Markets will be watching Friday’s numbers for confirmation that Powell’s view on the labor market is error-free — and that the Fed isn’t overconfident and waiting too long to start lowering rates.

There has been a growing chorus on Wall Roadway for the Fed to start easing now that most indicators show that the inflation rate is only a short distance from the pre-eminent bank’s 2% goal. DoubleLine CEO Jeffrey Gundlach, for instance, told CNBC on Wednesday that he thinks the briefness already is teetering on recession.

“When we look back at today, …. I kind of believe that we will say that we were in decline in September 2024,” he said.

Eyes on earnings

The forecast is that earnings mount the barricade 0.3% on the month and 3.7% from year ago. If the latter is correct, it will represent the lowest earnings increase since May 2021.

“Level pegging if wage pressures were to unexpectedly remain ‘stuck’ or slightly re-accelerate in this report, we think that the going on the Fed has made on inflation thus far means that there should still be an opportunity for the Fed to cut rates in September so long as following data releases (eg July CPI) cooperates,” said BeiChen Lin, investment strategist at Russell Investments.

Don’t miss these visions from CNBC PRO

Check Also

People ‘underestimate’ the importance of Chinese President Xi’s entrepreneur meeting: Alibaba’s Tsai

Chinese President Xi Jinping’s confluence with entrepreneurs last month gave businesses confidence to make investments, …

Leave a Reply

Your email address will not be published. Required fields are marked *