October 27, 2021

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194,000 new jobs in the US – E24

September jobs numbers are weaker than economists had expected. The US Federal Reserve announced that the reduction of crisis measures may come soon, but the time depends on the current jobs report.

Businesses in the US need people as the economy recovers in the wake of the pandemic.

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The case is updated…

On Friday afternoon, the jobs report that measures activity in the world’s largest economy will be published. It matters for how the US Federal Reserve (Fed) implements planned cuts to key crisis measures after the coronavirus pandemic hit markets hard.

Before the numbers were released, DNB Markets Chief Economist Knut Magnussen said the most important thing in today’s jobs report is whether it is good enough with regard to the US Federal Reserve’s indications of an imminent downsizing.

– Jerome Powell (Federal Reserve Chairman, .anm.) was quite clear at the last press conference that there should be a “decent” report, Magnussen told E24.

Then the question is how to interpret it, but the translation becomes “usable,” or something like that, says Magnussen.

It won’t take much before the Fed is satisfied. I think they decided in the first place, but look at the number for safety.

Magnussen is referring to the “most important numbers of the month,” which are part of the US Nonfarm Payrolls report.

According to Bloomberg, economists predicted in advance that 500,000 new non-farm jobs would be created in the United States in September. DNB expects 600,000 new jobs.

The US Federal Reserve announced interest rates unchanged in September, but said the central bank would begin phasing out massive support purchases soon, which economists interpreted as a Fed cut from November. Support purchases amount to 120 billion per month.

Chief Economist Knut Magnussen at DNB Markets

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Kjetil Olsen, chief economist at Nordea Markets.

I’m still waiting for a good speed

Kjetil Olsen, chief economist at Nordea Markets, also expected a strong jobs report.

We believe that there is still good momentum in the US economy, and that the report will be better than last time, Olsen said and refers to the August report with 235,000 new jobs.

Olsen notes that the September numbers may come as a surprise, as seasonal volatility affects this month’s report.

There is a lot of focus on odd months. Most likely it will be a solid number, if not, next month will be even better. It’s hard to predict accurately, but the trend is very strong, despite the impact of the delta variable on the economy, says Olsen.

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Better than expected in the private sector

Elisabeth Holvik, chief economist at Sparebank 1 Gruppen, said earlier this week that the most important thing is to look at all signs of inflation ahead of the labor market report.

Recently, figures have come in showing that inflation in the United States is itself Highest in 30 years. In September, the eurozone experienced the highest inflation rate since 2008.

An important stock market discussion is whether the high inflation in the US is temporary, as the Federal Reserve has been keeping a close eye, or whether it will become more permanent. In this context, wage growth will be central to monitoring. If wage growth rebounds as a result of a shortage of people in the labor market, the long-term US Federal Reserve may have to respond.

There has been a good pace in the US economy in recent months, with optimism in both industry and retail, and high demand for labor. So, if those numbers become strong on Friday, and we also see signs of increased wage growth, they could accelerate interest rate expectations again, Holvik told E24.

Earlier this week, there was an update that showed that the number of employees in the US private sector (ADP) rose by 568 thousand in September, versus 425 thousand expected, according to figures from Infront.

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Read on E24 +

Comment: “Have the exchanges reached their limit?”

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