(Bloomberg) -- Economists anticipate that hiring picked up slightly in September while the unemployment rate held steady at 4.2%, an outcome that would assuage any lingering concerns that labor demand is deteriorating.
Nonfarm payrolls likely rose by 150,000 last month, based on the median forecast of estimates in a Bloomberg survey. That would be up from 142,000 in August and the most in four months.
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Softer hiring and a rise in the jobless rate earlier this year were major drivers behind the Federal Reserve’s decision to start its policy-easing campaign with a large half-a-point cut in interest rates last month. Chair Jerome Powell this week reiterated that he wouldn’t want to see further weakening in the labor market.
The range of forecasts for September payroll growth is fairly wide, from 70,000 to 220,000. Anna Wong, chief US economist at Bloomberg Economics, said that seasonal adjustments made the month particularly hard to predict and the figure may come in surprisingly high. She anticipates 188,000 job additions when the Bureau of Labor Statistics publishes the monthly report Friday.
Catch-Up Sectors
Economists are keeping close tab on industries that drove job creation in recent years as they recovered from the pandemic. The so-called catch-up sectors include education, state and local government, as well as health care, which has weakened in recent months.
“With employment levels in health care and government approaching their pre-pandemic trends, the boost from catch-up hiring has slowed sharply,” Goldman Sachs economists wrote in a note. “We expect this boost will continue to fade and will be mostly complete by year-end, weighing modestly further on payroll growth.”
Under the Surface
Beyond the headline figures, some economists anticipate some weakness bubbling under the surface.
The underemployment rate — which includes those who are only marginally attached to the labor force — has been trending higher for the past year and now stands at the highest level in almost three years. Meanwhile, the number of people employed in temporary help services — some of the first jobs to get slashed when the economy turns — has also been shrinking.
“The more pertinent signal will be one of a rapidly cooling labor market, with the details likely to suggest a growing swath of workers are underemployed,” Bloomberg Economics wrote in a note Thursday. “The bigger picture is that the Federal Reserve’s 50-basis-point rate cut hasn’t stabilized the labor market.”
The economists anticipate the unemployment rate to rise to 4.3%.
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