Job growth is expected to pick up as the unemployment rate remains unchanged

September's jobs report is expected to serve as the latest evidence that the labor market has cooled in 2024, but is not slowing quickly enough to prompt the Federal Reserve to make a major interest rate cut in November.

The Bureau of Labor Statistics' monthly report, scheduled to be released Friday at 8:30 a.m. ET, is expected to show that nonfarm payrolls rose by 150,000 in September while the unemployment rate remained stable, according to consensus estimates compiled by Bloomberg remained at 4.2%.

In August, the U.S. economy added 142,000 jobs and the unemployment rate fell to 4.2% after unexpectedly rising to 4.3% in July.

Here are the key numbers Wall Street will be looking at on Friday morning compared to last month, according to data from Bloomberg:

• Non-farm payrolls: +150,000 vs. +142,000 previously

• Unemployment rate: 4.2% compared to 4.2% previously

• Average hourly earnings, month over month: +0.3% compared to +0.4% previously

• Average hourly wage year-on-year: +3.8% compared to +3.8% previously

• Average weekly hours worked: 34.3 vs. 34.3 previously

The central question in Friday's report is whether the data reflects a significant slowdown in the labor market that could lead to another big rate cut from the Fed.

“We expect nonfarm payrolls growth to be stronger in September than in August, but also expect unemployment to rise slightly,” Nancy Vanden Houten, chief economist at Oxford Economics, wrote ahead of the release in a customer message. “If the balance sheet report is much weaker than expected, that could be enough to prompt the Federal Reserve to cut interest rates by another 50 basis points at its November meeting.”

So far, investors are largely not assuming that this will be the case. Markets on Thursday were pricing in about a 36% chance that the Fed will cut interest rates by half a percentage point in November, according to the CME FedWatch Tool.

Read more: What the Fed's interest rate cut means for bank accounts, CDs, loans and credit cards

“We expect the September jobs report to confirm the status quo of a slightly weakening labor market characterized by slower demand absorption rather than mass layoffs,” EY chief economist Lydia Boussour wrote in a note ahead of the release. “The overall pace of job creation likely moved sideways in September, with nonfarm payrolls expected to rise by about 145,000, following a 142,000 increase in August.”

Other recent labor market data reflects a work environment in which fewer workers are changing jobs, but companies are not conducting mass layoffs. On Thursday, Labor Department data showed that 225,000 Americans filed for unemployment benefits in the week ended Sept. 28, near the lowest level in four months.

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Earlier this week, data from ADP showed that the private sector added 143,000 jobs in September, above economists' estimates of 125,000 and well above the 99,000 in August. This marked the end of a five-month decline in private sector job growth.

“This is a pretty healthy, wide-ranging recovery,” Richardson said. “And probably unexpected for a lot of people who thought the job market was on a downward trend. This month, of course, gives such assessments a break. Hiring numbers are still solid.”

However, there are some signs of weakness. New data from the Bureau of Labor Statistics released Tuesday showed that the quit rate, a sign of worker confidence, fell to 1.9% in August from 2% in July, marking the slowest increase since June 2020 The Labor Turnover Survey (JOLTS) showed that the hiring rate reached 3.3% in August, compared to 3.4% in July. Excluding the pandemic, the hiring rate in August was at its lowest level since 2013.

“The slowdown in attrition is expected after years of feverish turnover, but as analysts look for signs of slowing labor demand stabilizing, the continued decline in hiring and firing rates is not a good sign,” said Sarah, senior economist at Wells Fargo House wrote on Tuesday in a note to its customers.

The House added: “Any unexpected weakness in this Friday’s report could prompt officials to implement another outsized rate cut.”

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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