Central bank officials have long wanted to see convincing evidence that the labor market is moderating but not collapsing.
Employers likely added jobs at a slower pace in August and wage growth likely cooled, contributing more evidence to the argument that the still-strong labor market has begun to moderate in all the right ways.
MORE JOBS Must-reads A more tepid August jobs report would come close on the heels of other data released earlier this week showing an unexpected decline in job openings in July and a healthy slowdown in the share of workers quitting their jobs. Both of those developments suggest a reduction in labor demand, which can help rebalance the labor market and relieve pressure on wage inflation.
“The August jobs report will likely bring more evidence that the labor market is gradually cooling,” EY senior economist Lydia Boussour wrote. Fed Chair Jerome Powell said during his Jackson Hole speech on Aug. 25 that the central bank expects the labor-market rebalancing to continue. But any signs that labor-market tightness is no longer easing could “call for a monetary policy response,” Powell said.
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