New data for this week: focus on the employment report

Employment data from the U.S. Labor Department for September will be released at 8:30 a.m. Eastern Time on Friday. Economists expect the number of jobs in the non-agriculture sector to rise by 250,000 last month, according to the Bloomberg consensus forecast. If the numbers are within expectations, it will mean a reasonable success for the FRS policymakers trying to control the labor market in their fight against inflation, but not enough for officials to reverse their plans to raise rates.

The strong labor market numbers may increase worries that FRS officials will continue raising rates aggressively and tightening monetary conditions. And while strategists expected the rate increase to affect employment data, the numbers have surprised for the better up to now. On Thursday, Labor Department data showed that the number of initial applications for unemployment benefits fell to 193,000 for the week, the lowest level since April.

Bank of America analysts said in a Friday post that they expect strong growth in salaries to continue, while labor market activity indicators such as initial applications for unemployment benefits and labor market data from the Conference Board, which takes into account agencies' predictions, remain higher after August's report.

Thornburg Investment Management portfolio manager Sean Sun said that investors want confirmation of inflation's decrease, but the high employment data numbers cancel out any hopes.

He compared the presence of some signs of disinflation and strong data on unemployment applications to the FRS trying to apply the brakes to a car that is still rushing downhill at a steep angle. He added that investors should be asking questions about how deep the recession has to be before they finally act, not about whether the FRS will change its policy.

Other labor market data to be released before Friday. They include the ADP Employment Report, which measures employment in the non-agriculture private sector, the Job Openings and Turnover Survey (JOLTS), and the Challenger Job-Cut, which provides information on the number of jobs and tracks corporate layoffs by industry and region.

Other economic reports for this week will include ISM manufacturing and services data, construction expenditures data, and total auto sales data.