(Bloomberg) — A week before Federal Reserve officials gather to reflect on the appropriate tempo of interest-rates cuts, three high-profile reports are set to show underlying resilience in the US economy and a temporary hiccup in job growth.
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Friday’s employment report, expected to show a modest 110,000 increase in payrolls — about half this year’s average gain of 200,000 — will reflect hits to the labor market from two hurricanes as well as a work stoppage at aircraft maker Boeing Co. The unemployment rate is forecast to hold at 4.1%.
Economists expect Fed policymakers to discount these temporary factors and lower rates a quarter percentage point at their Nov. 6-7 meeting. While officials are confident that price pressures are generally abating, a separate report is forecast to show the central bank’s preferred gauge of underlying inflation accelerated at the end of September.
The personal consumption expenditures price index, excluding volatile food and energy costs, is seen rising 0.3%, the most in five months. The report on Thursday is also expected to show consumer spending and personal income strengthened in September from a month earlier, indicating momentum in the largest part of the economy.
What Bloomberg Economics Says:
“We expect October’s US payrolls report to show the first negative jobs print since December 2020, well below the consensus forecast of 120k. Much of the weakness is due to weather-related disruptions, but we also see a slowdown in cyclical sectors.”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou & Chris G. Collins. For full analysis, click here
On Wednesday, the government will also issue its first estimate of third-quarter gross domestic product, and forecasts call for a solid 3% annualized pace that would match growth seen in the previous three months. In addition to robust consumer spending, GDP was likely bolstered by a pickup in business outlays for equipment.
Other reports this week include September job openings, third-quarter employment costs and October consumer confidence. The Institute for Supply Management will also release its October manufacturing index.
In Canada, GDP data will show if the economy is on track to hit the Bank of Canada’s forecast of 1.5% annualized growth in the third quarter. Officials previously estimated 2.8% growth but revised that down as they cut rates by 50 basis points on Oct. 23. Among appearances, Bank of Canada Governor Tiff Macklem and his colleague Carolyn Rogers will speak to lawmakers about that decision.
