U.S. labor market report for September comes out today

On Friday, the Labor Department will release its employment report for September. According to forecasts and average estimates by Refinitiv economists, the data will show that wage funds increased by 250,000 last month and that the unemployment rate remained stable at 3.7 percent. In August, the figure was 315 000, meaning it fell and is the weakest monthly employment growth since December 2020.

The average hourly wage is expected to increase by 0.3% or 5.1% per year.

Employment was expected to be lower. Higher employment could fix another 3/4 of a percent point increase in the interest rate. In an attempt to catch up with ongoing inflation, officials have already approved 3 consecutive 75-basis-point increases in June, July and September. Now they have charted an aggressive course for the rest of the year.

In the last weeks there are more and more indications of the loss in strength of the labor market. Many companies, including Google Alphabet, Walmart, Apple, and Microsoft have announced hiring pauses or layoffs.

Also, it was expected that the increase in applications for unemployment benefits would grow less. Last week, this figure exceeded expectations. The number of Americans applying for unemployment benefits for the first time rose to 219 000. That's a five-week maximum.

An increase in unemployment benefits may be a warning that employers lay off workers, consumers reduce spending, and the economy stagnates. Based on the other data released this week, job openings have fallen to their lowest level since the pandemic began. This points out that employers defer hiring to the sidelines.

FRS Chairman Jerome Powell admitted at a press conference after the September meeting that higher rates may cause an increase in unemployment.