The August jobs report is likely to indicate a slowdown in the labor market

All eyes will be on the August jobs report when it’s released on Friday morning, as investors look for clues about the health of the labor market in the face of rising interest rates and flat inflation.

US Department of Labor high risk in August Payroll reportThe report, due at 8:30 a.m. ET, is expected to show that employment increased by 170,000 last month and the unemployment rate held steady at 3.5%, according to the median estimate of economists at Refinitiv.

This would be a decrease from 187,000 profit in July The monthly average recorded over the past 12 months is 312,000. However, it is slightly higher than the average monthly increase before the pandemic.

The workers are now demanding nearly $80,000 to start a new job

“The August jobs report is likely to provide more evidence that the labor market is gradually slowing,” said Gregory Daco, chief economist at EY.

Daco said he expects some “loud statements” on Friday, thanks to the ongoing strike by actors and writers that has shut down most Hollywood film and television productions, as well as the bankruptcy of Hollywood. Yellow trucking giant.

“We estimate that these two factors could cumulatively burden the payroll by 30,000 to 40,000 jobs in August,” he said.

Job openings fell more than expected in July to the lowest level in two years

the Federal Reserve The bank is closely watching the report for evidence that the labor market is finally softening after months of surprisingly strong gains in jobs as policymakers try to keep inflation under control. Although the CPI has slowed from its peak of 9.1% in June 2022, it is still well above the Fed’s preferred target of 2% despite 11 consecutive rate hikes.

Slowing job growth and more moderation in wage gains on Friday could be a welcome sign for the US central bank.

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The labor market has held historically steady over the past year, defying economists’ expectations of a slowdown. However, there are signs that it is beginning to decline.

A separate report released on Wednesday showed this job openings It fell to 8.8 million at the end of July. This represents the lowest level of job openings since March 2021.

However, employment opportunities remain historically high. before COVID-19 pandemic It started in early 2020, and the highest recorded was 7.6 million. There are approximately 1.5 jobs for every unemployed American.

The report also noted a decrease in resignations, indicating that employees are becoming less confident in their ability to leave their jobs and find new ones.

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This data, along with another report showing that hiring by private firms rose at the slowest pace in five months, paint a picture of a labor market that is finally beginning to cool off ahead of the August payroll report.

“The labor market is slowing, taking the pressure off policymakers interested in a second wave of inflation,” said Jeffrey Roach, chief economist at LPL Financial. “Companies should get some relief as inflation slows and quietly dissipate the risk of quitting.”