Steady Unemployment, Moderate Job Growth May Halt Larger Rate Cuts From Fed

Economists anticipate that job growth in the United States moderately picked up in September, while the unemployment rate is expected to remain unchanged.

In this backdrop, the Federal Reserve may decide against large interest rate cuts in its final two meetings of the year as economic experts believe the jobless rate has held steady at 4.2%.

In August, non-farm payrolls stood at 142,000, and in a Bloomberg survey, economists are expecting non-farm payrolls to likely have risen by 150,000 in September. On the other hand, a Reuters survey of economists showed that non-farm payrolls are expected to have increased by 140,000 jobs last month.

Furthermore, there has also been a reduction in temporary layoffs, which is believed to have helped keep the jobless rate in place.

After the Federal Reserve cut interest rates last month, Fed Chair Jerome Powell said the reduction was a display of policymakers' commitment toward sustaining better unemployment rates.

The Bureau of Labor Statistics will publish the monthly report Friday, but chief U.S. economist at Bloomberg Economics, Anna Wong, said that the payroll growth count may turn out to be a surprise for some. She expects a higher figure for the September jobs: 188,000.

Economists at Goldman Sachs are expecting payroll growth throughout the end of the year.

"With employment levels in health care and government approaching their pre-pandemic trends, the boost from catch-up hiring has slowed sharply," they noted.

"We expect this boost will continue to fade and will be mostly complete by year-end, weighing modestly further on payroll growth," they added.

In terms of the U.S. economy's labor needs, economists believe there should be as many as 200,000 jobs per month to ensure that jobs keep up with growth in the working-age group.