#非农就业报告即将揭晓 U.S. August nonfarm payrolls to be released tonight: What could truly shake September rate-hike expectations?

At 20:30 Beijing time on Friday, the United States will release its August nonfarm payrolls report. The market generally expects hiring activity to rebound somewhat in August after nonfarm employment unexpectedly fell by 23,000 in July, though the increase is still expected to be limited.
“Low hiring, low layoffs” remains the dominant feature of the current U.S. labor market. The median market forecast shows that nonfarm payrolls are expected to increase by 56,000 in August, while the unemployment rate may remain at 4.1%. Average hourly earnings growth is expected to rebound from 0.1% month-on-month in July to 0.3%, while year-on-year growth is expected to edge down to 3%. This report will be the most important employment data released ahead of the Federal Reserve’s September policy meeting.
The market currently expects the Federal Reserve to carry out its first rate hike in more than three years this month, with a relatively high probability. Unless the employment data deteriorate significantly, a moderately weak report may not be enough to change market expectations for monetary policy.
Employment growth is slowing, but the unemployment rate remains low In July, U.S. nonfarm employment fell by 23,000, while May and June employment data were revised down, with the combined total for the two months 103,000 jobs below the previously reported figures. Data from several consecutive months have shown that U.S. hiring activity is cooling significantly. However, the unemployment rate has not risen correspondingly. More than 250,000 people left the labor force in July, causing the unemployment rate to fall from 4.2% to 4.1%. In the 12 months through July, the U.S. labor force had declined by approximately 1.3 million people.
Adam Schickling, a senior economist at Vanguard, believes that the U.S. labor market has moved from “low hiring, low layoffs” closer to a state of “almost no hiring and almost no layoffs.” “The usual description is ‘low hiring, low layoffs.’ I even think we are now approaching a market with ‘no layoffs and no hiring.’” This environment is especially unfavorable for people entering the labor market and the unemployed, but judging from corporate layoffs, the overall labor market remains relatively stable. Schickling therefore believes that although the U.S. labor market is weak, it has not yet experienced a clear loss of momentum.
Kiplinger economist David Payne also said that the “new normal” for future U.S. employment reports may be monthly job gains of fewer than 100,000, rather than the six-figure increases commonly seen in the past.
Weak ADP data widen Wall Street forecast divergence The “little nonfarm payrolls” ADP data released on Wednesday further reinforced market caution. U.S. private-sector employment increased by only 38,000 in August, below July’s 46,000 and economists’ forecast of 47,000. By sector, employment increased in education, health care, leisure and hospitality, and construction, while manufacturing jobs saw the sharpest decline.
Although ADP data do not fully correspond to official nonfarm payrolls, the result increased the risk that Friday’s data will come in below expectations.
Wall Street’s views on August nonfarm payrolls are currently sharply divided. Wells Fargo expects job gains of 80,000. The bank believes that the unusual declines in leisure and hospitality employment and state and local government education jobs in July exaggerated the extent of labor-market cooling, and that some recovery may occur in August. BofA Securities expects job gains of 40,000, arguing that U.S. employment data have shown pronounced seasonal weakness in recent years and that August is also typically more likely to come in below market expectations.
Fifth Third Bank Chief U.S. Economist Bill Adams expects August nonfarm payrolls to fall by approximately 25,000 again. He believes that a contraction in labor supply is one important reason, rather than a sudden collapse in corporate labor demand. Adams specifically noted that on July 27, the U.S. government canceled the temporary protected status of more than 300,000 Haitian migrants and terminated their work permits, which could affect labor-intensive industries such as health care and social assistance. The weak ADP data further strengthened his pessimistic view. Schickling expects employment to increase by approximately 20,000 in August, but believes the unemployment rate could rise to 4.3%. He said that the recent decline in the labor force was related to weaker labor-force participation among people aged 25 to 34. If this group reenters the labor market, the unemployment rate could instead rise in the short term.
The BlackRock Investment Institute pointed out that slower labor-supply growth means that a decline in employment growth does not necessarily indicate a simultaneous deterioration in demand. If the labor force continues to shrink while artificial-intelligence-related investment supports economic activity, wage and inflation pressures may remain resilient. The Federal Reserve is more focused on inflation; employment data would need to “weaken significantly” to change expectations Federal Reserve Chair Wosh said at the Jackson Hole annual meeting last Friday: “The labor market is fairly stable.” He noted that an unemployment rate of 4.1% “remains very low by historical standards.” Wosh also said that in a labor market close to full employment, employment growth “will naturally remain at a lower level.”
In other words, monthly job gains of only tens of thousands do not necessarily mean that the economy has entered a clear recession. Compared with employment, the Federal Reserve is currently more focused on inflation. Wosh said that the labor market is consistent with full employment, but that the data are more concerning regarding price stability, one of the Federal Reserve’s mandates. Previously released PCE inflation data showed that U.S. prices rose 3.7% year-on-year in July, significantly above the Federal Reserve’s 2% target. After Wosh’s hawkish remarks, the CME FedWatch tool showed that the probability of the Federal Reserve keeping rates unchanged through September was 37.7%, while the probability of a cumulative 25-basis-point rate hike was 62.3%.
BofA Securities believes that August nonfarm payrolls alone are unlikely to determine whether the Federal Reserve raises rates in September. Unless the report is significantly weaker than expected, inflation data will remain the core basis for the Federal Reserve’s policy decisions. What could truly change market pricing is clearer evidence of deterioration in the labor market. Schickling said that if employment posts negative growth for a second consecutive month in August, or if the unemployment rate rises to 4.3%, the market may significantly reduce the probability of a September rate hike. Average hourly earnings below expectations would also reinforce this view.$BTC ‌