Key facts
- US job growth likely slowed in September, with nonfarm payrolls expected to increase by 90,000.
- The unemployment rate is forecast to remain steady at 4.1% for a third consecutive month.
- August's nonfarm payroll figure of 162,000 is expected to be revised downward.
- Wages are projected to have risen 3.2% year-over-year in September.
- Economists do not foresee immediate labor market disruption from the US-Israel war.
- Construction and manufacturing payrolls are expected to see strong increases, partly due to AI infrastructure buildout.
US job growth likely slowed in September, with economists forecasting the unemployment rate to remain steady at 4.1% for a third consecutive month, suggesting a stable labor market heading into the fourth quarter. The anticipated moderation follows a surprise jump in August nonfarm payrolls, which economists partly attributed to seasonal adjustment volatility. The Labor Department's Bureau of Labor Statistics is set to release its employment report on Friday.
Economists surveyed by Reuters predicted that nonfarm payrolls increased by 90,000 last month, a decrease from August's surge of 162,000. Estimates for September ranged from 35,000 to 180,000. There is an expectation that August's figure, initially the largest in five months, will be revised downward. Marc Giannoni, chief US economist at Barclays, suggested that the seasonal adjustment significantly exaggerated August's gain, potentially showing a drop of 74,000 jobs if adjusted with later factors.
Despite concerns about the US-Israel war with Iran, economists do not yet see it disrupting the labor market. However, they anticipate that headwinds from the conflict, including high energy prices and strained supply chains, could begin to impact the market by year-end. Robust corporate profits and resilient domestic demand are currently shielding workers from layoffs, contributing to labor market stability with historically low layoff rates and modest hiring.
Employment growth is expected to moderate in the leisure and hospitality industry and local government education sectors after strong gains in August. Construction and manufacturing sectors are forecast to continue strong increases, partly driven by infrastructure buildouts for AI technology, such as data centers. The impact of the termination of Temporary Protected Status for Haitian immigrants is unclear but is expected to be a gradual headwind rather than a one-time shock, cushioned by alternative legal statuses and persistent labor shortages.
Economists estimate that the economy needs to create between 50,000 and 80,000 jobs per month to keep pace with the working-age population's growth. They also noted that a low jobless rate should not be mistaken for a tight labor market, emphasizing wage growth as a key indicator. Wages are forecast to have increased 3.2% year-over-year in September, indicating the labor market is not a primary source of inflation. The Federal Reserve recently raised its benchmark interest rate by 25 basis points, and market expectations for further tightening this year have diminished.