US Jobs Data: Growth expected to cool as Fed indicates ratings pause

Employers in the United States are expected to slow their hiring pace this month, following robust payroll increases earlier in the year, Bloomberg reported. This reflects the strong labour market driving economic expansion, it added.

Government data, to be released on Friday (November 3), is projected to reveal an increase of approximately 190,000 payrolls in the world’s largest economy for October, maintaining solid job growth seen over the past three months.

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Slowest Annual Rise in Hourly Earnings

Hourly earnings are expected to rise at the slowest annual pace in more than two years, partly due to an increase in labour force participation, the report noted. This moderation in pay gains plays a role in the anticipated decision by the US Federal Reserve (Fed) policymakers to hold interest rates steady in their upcoming meeting.

The robust labour market has played a crucial role in sustaining consumer spending and economic growth while inflationary pressures gradually recede. It is also a contributing factor to the improved economic outlook, with reduced chances of a recession since June, it added.

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Employment Costs, Productivity data being watched

Economists are also closely monitoring a report on third-quarter employment costs to assess wage growth trends, as labour costs are a significant expense for employers. Additionally, the government’s latest productivity data will provide insights into how well firms are managing increased costs, it said.

There are expectations of a gradual easing of tight labour conditions, with job openings in September forecasted to decline from the previous month, approaching levels not seen since March 2021.

Other data expected

The week ahead is set to be busy with October surveys of manufacturers and service providers in the US.

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In Canada, fresh job data for October will shed light on the labour market’s status, while gross domestic product data for August is expected to show minimal growth due to increasing interest rates impacting households and spending.

Outside North America, the financial world will be closely watching a central bank decision in Japan, a potential policy shift. No-change rate outcomes are expected in the UK and Norway. Possible rate cuts are anticipated in Brazil and the Czech Republic, while data from the euro zone may indicate a slowdown in economic growth and decreasing inflation.