Employment growth in the US slowed in August, implying that inflation threats have been further mitigated, reducing the need for another Federal Reserve interest-rate hike.
The August jobs report in the United States is expected to indicate that companies increased their payrolls by over 170,000 while the unemployment rate remained at a record low of 3.5%. The three-month average rise in employment growth would be the weakest since the start of 2021.
In order to achieve 2% inflation, Fed Chair Jerome Powell stated at Jackson Hole, Wyoming, that weaker labor market conditions and a period of below-trend economic growth are required.
Other labor market indicators in the coming week are expected to show fewer July job openings than a month ago, indicating that labor supply and demand are becoming more balanced. This might help restrain wage pressures and, eventually, inflation.
“Wage pressures have been relieved as a result of this balance. Wage growth continues to decrease, albeit gradually, across a number of metrics,” Powell said in Jackson Hole.
On Thursday, Fed officials will also get a new reading on their favorite inflation indicator, the personal consumption expenditures price index minus food and energy.
The consensus projection predicts a second consecutive 0.2% monthly gain in July, the weakest back-to-back improvement in the underlying inflation gauge since the end of 2020.
