After a week of a nasty trade war with Canada, a worse-than-expected inflation report and a hawkish speech from Federal Reserve Chairman Kevin Warsh, the economy deals with something more prosaic this week.
Multiple reports from the private sector and the federal government will provide updates to the state of the labor market. Friday is the big day, with the August jobs report from the Bureau of Labor Statistics expected to show a gain of around 50,000. That would be a shift from the unexpected loss of 23,000 jobs in July.
But some see the possibility for another negative number.
“Payrolls likely fell for a second consecutive month in August,” Comerica Bank Chief Economist Bill Adams wrote on Monday morning. “The government ended temporary protected status for over 300,000 Haitians on July 27, also canceling their work authorization; 100,000 to 200,000 had been in the labor force.”
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“The unemployment rate probably held steady despite lower payrolls because the workers who lost authorization and could no longer seek work would have left the labor force,” Adams added. “As a result, the labor force likely contracted again in August after falling 1.3 million over the 12 months through July.”
On Tuesday, the BLS will issue the job openings report for July, though little change is expected from the 7.4 million number in June. Wednesday brings the monthly employment report from private payroll company ADP. That is forecast to show 45,000 jobs created in July, essentially the same as in June.
“Labor markets are quite stable,” Warsh said in his Friday speech. “The jobless rate, at 4.1 percent, remains low by historical standards and has not changed much for a couple of years. Unemployment claims, on a four-week average – an empirically robust real-time indicator – are near their lowest level in decades.”
The low monthly numbers are in contrast to the last few years as companies reshaped their workforces after COVID-19 and baby boomers started hitting retirement. Demand for workers is also being affected by artificial intelligence.
Wednesday will additionally feature the release of the latest survey of the economy by regions, known as “the beige book,” from the Fed. Markets will be looking for what firms say about their businesses, especially whether they are seeing higher prices for their supplies.
But geopolitics may well creep into the picture anyway this week. The U.S. and Iran traded gunfire over the weekend as America struck Larak Island in the middle of the Strait of Hormuz. Iran retaliated with missile strikes.
That drove the price of global benchmark Brent crude oil back over $90 a barrel – an increase of $3. Meanwhile, domestic gasoline prices are $4.08 on average.
In Washington, the House is back and will be seeking to ink a deal to keep the government funded before lawmakers head out of town to campaign for the midterm elections in November.