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Investors Await September Jobs Report For Fed Rate Clues

September jobs report and non-farm payrolls data to shape market expectations.

All eyes are on the Bureau of Labor Statistics’ job market report for September, which will be released on Friday at 8:30 a.m. ET. This report will unveil the highly anticipated non-farm payrolls (NFPs) figure for last month, as well as updates on the unemployment rate and wage growth.

The Netflix logo is seen on top of their office building in Hollywood, California, March 2, 2022. Unemployment is expected to fall down from 3.8% to 3.7% in the coming months. (CHRIS DELMAS/GETTY IMAGES) 

It is the most eagerly awaited macroeconomic data of the week, as it has the potential to trigger significant market reactions and influence investor expectations regarding the Federal Reserve’s next interest rate decision.

Leading up to the BLS jobs report, the week witnessed a major disappointment in the form of the ADP National Employment report. 

It showed 89,000 new private sector jobs added in September, down from the previous month’s 180,000 and well below the expected 153,000.

“Firms may have a larger pool of applicants to choose from, but workers also have more options the more applications they send,” said a team of economists led by Serdar Birinci in a written statement, an economic policy advisor for the St. Louis Fed. 

On Thursday, initial jobless claims saw a slight increase, reaching 207,000 for the week ending Sept. 30, up from 205,000 the previous week but still lower than the expected 210,000.

Traders are pricing in a 20% probability of a Fed rate hike in November and a 34% chance of a hike in December, according to CME Group’s FedWatch Tool.

Economists’ consensus estimates call for the headline NFP figure to decrease from 187,000 in August to 170,000 in September, marking the lowest level since January 2021.

The unemployment rate is anticipated to drop from 3.8% to 3.7%.

Average hourly earnings are projected to increase at a monthly pace of 0.3%, a slight acceleration from the 0.2% seen in August. On an annual basis, wages are expected to maintain a steady growth rate of 4.3%.

Citigroup anticipates that all components of the September employment report will indicate a tighter labor market than the consensus suggests. This expectation is based on the low initial jobless claims observed in recent weeks, which could indicate fewer layoffs post-summer.

The firm predicts a 240,000 increase in payrolls, a decline in the unemployment rate to 3.6% and solid 0.3% month-over-month growth in average hourly earnings, with potential upside risks. This should strengthen market expectations of another rate hike by the Fed in November.

The effects of various workers’ strikes are expected to be limited in the September payrolls report, in the Wall Street firm’s view.

Macrobond‘s NFP model suggests that September payrolls increased by 170,000, only slightly softer than the 187,000 reported the previous month.

ING Groep N.V. also expects the NFP figure to come in at 170,000 for September.



Produced in association with Benzinga

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