Tonight's Non-Farm Payrolls Preview: August NFP is likely to show continued employment weakness, and only major surprises could impact the Federal Reserve's policy decisions.
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At 8:30 PM Beijing Time, the U.S. will release its August non-farm payrolls (NFP) report. The market expects non-farm payrolls to rise by 56,000, following an unexpected decline of 23,000 in July. Economists’ forecasts range from a drop of 25,000 to an increase of 121,000, reflecting significant market divergence over labor conditions. The unemployment rate is projected to hold steady at 4.1%, though some economists forecast it will rise to 4.2%; annualized wage growth is likely to cool from 3.2% to 3%. Morgan Stanley’s chief economist Michael Gapen estimates that the revocation of temporary protected status (TPS) for Haitian immigrants could drag down non-farm payrolls by around 15,000, while a rebound in employment in local government education, leisure and hospitality sectors may provide support. Most economists believe that unless the NFP data brings a major surprise, the report is unlikely to directly decide the interest rate outcome of the Federal Reserve’s September 15-16 meeting, as market focus will shift to next week’s Consumer Price Index (CPI). Fed Governor Waller clearly stated on Thursday that if upcoming data confirms cooling inflationary pressures, he is inclined to support keeping interest rates unchanged this month. Currently, the market expects a 50% probability of a September rate hike, down from 63.2% on Wednesday.
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