Analysts forecast slower but still strong US job growth in August

Analysts forecast slower but still strong US job growth in August

WASHINGTON, Sept 2 – U.S. businesses likely continued to hire workers at a strong pace in August as wages steadily rose, signs of continued labor market strength that could prompt the Federal Reserve to make a third rate hike. interest rate of 75 basis points this month.

The Labor Department’s long-awaited jobs report to be released on Friday comes a week after Fed Chairman Jerome Powell warned Americans of a painful period of slow economic growth and possibly rising unemployment, while the central bank aggressively tightens monetary policy to stifle inflation.

Strong anticipated job growth last month would be further evidence that the economy is still expanding, despite gross domestic product contracting in the first half of the year. It is also a sign that the Fed still needs to cool down the labor market despite the rate hikes already in place.

“If we’re still talking about 300,000 job growth and an unemployment rate of about three and a half, or 3.6%, I think the Fed really thinks the labor market can absorb more aggressive tightening,” Will said. Compernolle, a senior economist at FHN Financial in New York. “We’re pretty far from any pain when it comes to the job market.”

Nonfarm payrolls probably increased by 300,000 jobs last month, after rising by 528,000 in July, according to a GLM survey of economists. This would mark the 20th consecutive month of job growth. Although it would be the smallest increase in 16 months, it would still be well above the pre-pandemic average.

Payroll growth estimates range from 75,000 to 450,000. The unemployment rate would remain unchanged at the pre-pandemic low of 3.5%.

Despite the uncertain economic outlook, the demand for workers remains high. On the last day of July there were 11.2 million job offers, with two offers for every unemployed person.

Initial jobless claims remain low and the Institute for Supply Management (ISM) measure of factory employment rebounded in August after three consecutive monthly declines. Feedback from factories surveyed by ISM showed that they “continued to hire at a strong pace in August, with little sign of layoffs, hiring freezes or downsizing due to non-replenishment.”

The Government surveys companies to know the payroll during the week that includes the 12th of the month. The Fed has raised its policy rate twice by three-quarters of a percentage point, in June and July. Since March, it has raised the interest rate from near zero to its current range of 2.25%-2.50%.

Financial markets are pricing in a roughly 78% chance of a 75 basis point hike at the Fed’s September 20-21 policy meeting. Consumer price data for August, due in the middle of the month, will also be an important factor in determining the next rate hike.

Average hourly earnings are forecast to rise 0.4%, following a strong 0.5% increase in July. This would raise the annual increase in wages to 5.3%, compared to 5.2% in July.

Melissa Galbraith
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