The Labor Department publishes its monthly jobs report early Friday. The initial nonfarm payroll count is usually weaker in August.
But the unemployment rate probably held at more than 50-year lows as labor market conditions remain tight. And that means wages likely rose again last month.
A weaker-than-expected jobs report could ratchet up concerns about an economic slowdown and the emergence of a recession, but most economists say that’s unlikely. The US economy appears to be in a sweet spot as it approaches the end of its sixth year of uninterrupted growth.
Several factors are likely to restrain hiring in August, including the Hollywood strike and the bankruptcy of a major trucking company. But the economy is still growing, and hiring in many industries has been robust, including retail, manufacturing, and health care. And employers have been cutting jobs at a slower pace. In the past six months, job cuts have totaled only 1.8 million.
That’s well below the pace of new hires, which has totaled 5.7 million in that same period. And wage growth has been surprisingly resilient as prices have fallen and wage inflation remains subdued.
The sluggish pace of job gains has raised questions about whether the Fed is on track to raise interest rates this year, but most experts expect the central bank will stick with its plan. “There isn’t a lot in this report that should keep the Fed from raising rates in September,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
Besides the labor data, the report will also offer some insights into the housing market and the state of consumer spending. The housing market is expected to weaken this year as homebuilders and builders struggle with higher mortgage rates and fewer buyers. Consumer spending is also expected to soften, but the economy’s underlying strength should prevent a sharp downturn.
It’s also possible that the hurricane will affect hiring this month. But if that turns out to be the case, any impact on hiring should be modest. And it’s worth noting that businesses tend to rehire quickly after natural disasters.
The hottest sector of the economy continues to be professional and business services, which have added jobs at a strong clip in recent months. But the cyclical sectors of leisure and manufacturing have been more sluggish. The August jobs report should be an essential test for these trends.