Traders are looking to see payroll gains accelerate in September after a shocking and disappointing employment report in August, when only 235,000 jobs returned against the more than 700,000 expected. Consensus economists predict that 475,000 payrolls returned in September and that the unemployment rate fell to 5.1%, the lowest since March 2020.
“There is more hope for the job market. The next few months will be important and we could see greater participation in the labor market as fear of the virus subsides, ”Bank of America US economist Michelle Meyer wrote in a note on Friday.
Meyer also pointed to the recent comments by Federal Reserve Governor Lael Brainard, who addressed some of the ongoing labor shortages and issues related to returning individuals to the workforce.
“The decline in labor force participation appears to reflect COVID-related constraints that have been extended by Delta rather than permanent structural changes in the economy,” Brainard said during a public address in Arlington, Virginia, last week.
But these virus-related risks still remain a matter of concern for the labor market recovery, and for the September jobs report in particular. And the US economy has again lost a net total of more than 5 million employees since March 2020, highlighting the deficit that still remains to be recovered on employment.
“On the other hand, we see a risk of a modest contraction in the public wage bill in September, as the education wage bill could decline slightly due to school closures amid the Delta wave and the negative return on investment of strong hires over the summer, ”Meyer said. “Therefore, we believe that the growth of the private wage bill will be slightly stronger than the growth of the non-farm wage bill. All in all, the data feed suggests another weak month of employment activity but a slightly faster pace of job creation compared to August. “
Importantly, September’s jobs report will be a key factor in informing the Federal Reserve’s timeline to officially announce and begin scaling back its asset purchase program in the era of the pandemic. The central bank said last month that it believed the economy was on its way to fend for itself without the extraordinary levels of monetary policy support seen over the year and a half.
And indeed, Fed officials said the economy had already reached the central bank’s inflation target, and only further progress on the labor market recovery was enough to trigger the start of the reduction. .
“It wouldn’t take a knockout, a great, super strong jobs report,” Federal Reserve Chairman Jerome Powell said at his last post-FOMC press conference in September. “It would take a reasonably good employment report for me to feel like this test is completed. ”
Names of consumers to report earnings
A number of companies are expected to release quarterly results throughout the week, offering a first glimpse of how corporate earnings hold up in the third quarter before a bigger wave of companies release results in the weeks to come. to come.
The names reported this week will focus on major consumer brands, including PepsiCo (PEP), Constellation Brands (STZ) and Levi Strauss (LEVI). One of the key themes of these reports and calls for results will be commenting on inflation, labor and supply chain challenges, given rising prices and material shortages already seen in various pockets of the economy.
Last week’s results from companies like Bed Bath & Beyond (BBBY), for example, have already been a harbinger of the myriad supply issues facing the retail industry. The company posted an unexpected drop in same-store sales for its quarter ending in late August, as Wall Street had forecast same-store sales growth. The drop is due to both consumer distrust of in-person shopping during the spread of the Delta variant and supply pressure which has weighed on growth.
When asked during the company’s earnings call if these challenges could ease over the remainder of the year, Bed Bath & Beyond CEO Mark Tritton said the company “ did not expect supply chain pressures to ease ”.
“We have operated under unprecedented supply chain conditions that have continued to increasingly tighten global trade since last year,” said Tritton.
Companies in other sectors have expressed similar concerns. Micron (MU), the nation’s largest memory chip maker, said in a letter to customers that it continues to experience cost increases for materials and services and “didn’t expect that pressure to come.” eases for the foreseeable future, ”according to a Bloomberg report. the week. And earlier in September, FedEx (FDX) posted a sharp drop in quarterly profits as supply chain pressures and rising labor costs put pressure on the transport giant’s margins. maritime.
- On Monday: Factory orders, August (1.0% expected, 0.4% in July); Durable goods orders, August final (1.8% in previous edition); Durable goods orders, excluding transport, August final (0.2% in the previous edition); Orders for non-military capital goods, excluding aircraft, August final (0.5% in previous print); Orders of non-defense capital goods, excluding aircraft, August final (0.7% in the previous edition)
- Mardi: Trade balance, August (-70.5 billion dollars expected, -70.1 billion dollars in July); Markit US Services PMI, September final (expected 54.4, 54.4 in the previous edition); Markit US composite PMI, September final (54.5 in previous version); ISM Services index, September (60.0 expected, 61.7 in August)
- Wednesday: MBA mortgage applications, week ended October 1 (-1.1% the previous week); ADP job change, September (450,000 expected, 374,000 in August)
- Thusday: Job cuts at Challenger, year-on-year, September (-86.4% in August); Initial jobless claims, week ended October 2 (349,000 expected, 362,000 in the previous week); Continuing claims, week ended September 25 (2.802 million in the previous week); Consumer credit, August ($ 18 trillion expected, $ 17.004 billion in July)
- Friday: Evolution of the non-agricultural payroll, September (488,000 expected, 235,000 in August); Unemployment rate, September (5.1% expected, 5.2% in August); Average hourly earnings, from month to month, September (0.4% expected, 0.6% in August); Average hourly earnings, year-on-year, September (4.6% expected, 4.3% in August); Activity rate, September (61.7% in August); Wholesalers’ stocks, from one month to the next, end of August (1.2% expected, 1.2% in the previous estimate)
- On Monday: No significant report is planned for publication.
- Mardi: PepsiCo (PEP) before the market opens
- Wednesday: Constellation brands (STZ) before the market opens; Levi Strauss (LEVI) after market close
- Thusday: Conagra Brands (CAG), Tilray (TLRY) before market opens
- Friday: No significant report is planned for publication.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, Youtube, and reddit