Market close
September Payroll Forecast to Cool as a Week of U.S. Data Begins
Economists see unemployment holding at 4.1% and wage growth steady, while annual revisions to the PCE deflator complicate the read on inflation.
Key points
- Economists expect September job growth to moderate from August's stronger-than-expected gain, with the unemployment rate seen unchanged at 4.1% and wage growth steady at 0.3% on the month.
- The August core PCE deflator is forecast to rise 0.27% month-on-month, slightly faster than July, alongside expected personal income and spending gains of 0.5% and 0.6%.
- Annual benchmark revisions and methodology changes to the PCE could alter the recent inflation profile and complicate comparisons with earlier months.
Economists expect U.S. job growth to moderate in September after an unexpectedly strong August, with the unemployment rate holding at 4.1% and average hourly earnings rising 0.3% month-on-month, according to a preview of the week's economic data. The September payrolls report is due Friday, capping a run of labour market releases that begins with August JOLTS figures and continues through ADP employment and weekly jobless claims.
The labour market readings arrive in sequence this week: the August JOLTS report first, then the September ADP employment release, then weekly jobless claims, and finally the official employment report. Recent labour market indicators have remained reasonably firm, and the economists described some moderation after August's strength as consistent with a labour market that is cooling only gradually — making the run of data a test of whether that gradual path is holding.
On the inflation side, the same preview puts the August core PCE deflator at 0.27% month-on-month, slightly above July's pace, with personal income and spending expected to rise 0.5% and 0.6% respectively. The deflator carries extra weight this month because the report will include the BEA's annual benchmark revisions and methodology changes, which the economists said could alter the recent inflation profile and affect comparisons with previous months.
That revision risk is the concrete condition shaping the week's outcome: if the reworked PCE series leaves the recent inflation profile broadly intact, the firmer August labour data and steady wage growth would support the gradual-cooling reading; a revised profile that shifts the recent path would undercut the clean month-to-month comparison the forecast relies on. The payrolls figure itself is expected to show the moderation that the economists see as consistent with gradual cooling, not a sharper break in the labour market.
