In advance of the upcoming jobs report, economists expect slow job market growth in August with a traditional summer lull and the ongoing trade dispute with China as key contributors. The forecast for the September 6th non-farm payroll number are currently at 160,000 new jobs, a figure both in line with expectations as well as the gradual slowdown we have recently seen.
For roughly 4 months, forecasts have fallen steadily along with overall confidence in the economy and stock market. ADP reported 195,000 new jobs during August which is above the consensus estimate. If tomorrow’s report reveals a similar value, expect markets to have a mixed initial reaction due to its pending impact on the Fed’s decision.
ISM manufacturing fell from 51.7 in July to 47.4 in August, a significant drop for the Employment index and a negative indication for U.S. manufacturing in general. With recent market turmoil due to the trade war and possibility of a recession, traders are looking for any sign of strength from the domestic economy.
A strong non-farm payroll would give the U.S. government more ammunition in the trade war, but could also signal to the Fed to hold off on adjusting interest rates. Tomorrow’s report will be a major data point in the Fed’s looming decision later this month. With many politicians calling for further easing – something previously unheard of – this report will help gauge the health of the economy.
“In a summer punctuated by trade-related market swings, the healthy U.S. labor market has been a steady source of reassurance of the economy’s strength,” reported Nela Richardson, Investment Strategist at Edward Jones.
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