Job growth is expected to have slowed in October as the Federal Reserve pressed on with its most aggressive monetary tightening campaign in decades.
The Labor Department is set to release its latest monthly jobs report at 8:30 a.m. ET on Friday. Here are Wall Street's expectations for the report, according to Bloomberg data:
Non-farm payrolls: +195,000 expected vs. +263,000 in September
Unemployment rate: 3.6% expected vs. 3.5% in September
Average hourly earnings, month-over-month: +0.3% expected vs. +0.3% in September
Average hourly earnings, year-over-year: +4.7% expected vs. +5.0% in September
If figures come in on par with forecasts, the estimated print will mark the lowest monthly reading in non-farm payrolls since December 2020.
A cool-off in October employment data would be a welcome sign for Federal Reserve officials, who are vigorously trying to tamp down an extraordinarily tight labor market that has placed upward pressure on wages and contributed to soaring prices.
But Friday’s figure won’t be enough to deter policymakers from proceeding with further rate hikes, particularly after messaging from Fed Chair Jerome Powell on Wednesday that indicated a slower but higher path forward for interest rates.
The projected figure would also continue to reflect hiring remains robust on a historical basis, with pre-pandemic payrolls averaging 150-200,000 per month. In the third quarter of this year, payroll gains have averaged 372,000 per month.
“Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers,” Powell said on Wednesday when addressing reporters after the FOMC delivered another 0.75% rate increase.
“The labor force participation rate is little changed since the beginning of the year,” Powell noted.
In September, the labor force participation rate ticked down from the prior reading to 62.3% from 62.4%.
While Powell cautioned against discussions of a policy shift, the jobs report Friday is set to be a key data point policymakers will assess in determining the magnitude of their next rate increase in December.
“In our view, the appropriate terminal rate is about labor markets and employment gains,” economists at Bank of America led by Michael Gapen said in a note on Thursday. “The Fed will know it has done enough when payroll growth slows further.”