September jobs report likely to show hiring cooled but remained healthy

Fed wants millions of Americans to lose jobs, cost of everything to go up: Fitz-Gerald

Fitz-Gerald Group principal Keith Fitz-Gerald and Sarge986 president Stephen Guilfoyle discuss the stock market's volatile reaction to the Fed's rate hike on "The Claman Countdown."

U.S. job growth in September likely cooled from a frenzied pace earlier this year, but hiring probably remained solid despite growing headwinds from higher interest rates and scorching-hot inflation.

The Labor Department on Friday morning is releasing its closely watched September jobs report, which is projected to show that payrolls increased by 250,000 last month and that the unemployment rate held steady at 3.7%, according to a median estimate by Refinitiv economists. That would mark a drop from the 315,000 recorded in August and would be the weakest monthly job growth since December 2020.

Meanwhile, average hourly wages are expected to rise 0.3% or 5.1% annually.

While monthly jobs data is always important, the Federal Reserve is closely watching this particular report for signs that the labor market is starting to slow down from its torrid pace as policymakers try to wrestle inflation, which is still running near a 40-year high, back to 2%.

THE FED'S WAR ON INFLATION COULD COST 1M JOBS

Now-hiring signs are displayed in front of restaurants in Rehoboth Beach, Delaware, on March 19, 2022. (Stefani Reynolds/AFP via Getty Images / Getty Images)

A hotter-than-expected figure on Friday could solidify another three-quarter percentage point interest rate hike when policymakers meet at the beginning of November. Officials already approved three straight 75-basis-point increases in June, July and September as they race to catch up with runaway inflation and have laid out an aggressive path for the remainder of the year.

Stocks sold off ahead of the report's release, with investors fearing that it could entail an even more hawkish move from the Federal Reserve.

SEVERE RECESSION NEEDED TO COOL INFLATION, BANK OF AMERICA ANALYSTS SAY

Ticker	Security	Last	Change	Change %
I:DJI	DOW JONES AVERAGES	44722.06	-138.25	-0.31%
I:COMP	NASDAQ COMPOSITE INDEX	19060.475899	-115.10	-0.60%
SP500	S&P 500	5998.74	-22.89	-0.38%

For months, the labor market has remained one of the few bright spots in the economy, with the economy adding more than 2 million jobs over the first half of the year.

But there are growing signs that the labor market is starting to weaken, with a plethora of companies, including Alphabet's Google, Walmart, Apple, Meta and Microsoft, announcing hiring freezes or layoffs in recent weeks.

Jobless claims also increased more than expected last week, with the number of Americans filing first-time unemployment benefits rising to 219,000, a five-week high.

Federal Reserve Chair Jerome Powell attends a press conference in Washington on July 27, 2022. (Liu Jie/Xinhua via Getty Images / Getty Images)

If unemployment benefits continue to climb, it could be a sign that employers are laying off workers as consumers pull back on spending and the economy grinds to a halt. Other data published this week shows that job openings plummeted to the lowest level since early in the pandemic, indicating that employers are putting hiring on the back burner.

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Fed Chair Jerome Powell conceded during the post-meeting press conference in September that higher rates could "give rise to increases in unemployment."

"We think we need to have softer labor market conditions," Powell said. "And if we want to set ourselves up, really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn't."