The US Bureau of Labor Statistics has released a preliminary revision of payroll numbers, showing a significant reduction in net job gains by 818,000 positions.
Deutsche Bank Securities senior US economist Brett Ryan joins Market Domination to discuss this development and its potential impact on the Federal Reserve’s decision-making on interest rates, ahead of Fed Chair Jerome Powell’s Jackson Hole speech on Friday.
Ryan believes the payroll revision “doesn’t change the Fed outlook very much.” He notes that the central bank is aware the labor market is slowing and that while Fed officials previously thought the labor market had undergone “a sharper slowdown from a pace of 240,000 to 150,000,” this revision paints a picture of the labor market being “fairly steady over the past 8 to 16 months.”
However, Ryan also believes this solidifies the case for a September interest rate cut, but does not support the “aggressive rate cuts out of the gate, which the market is looking to get signals for.”
With Chair Powell set to speak at the Jackson Hole Symposium on Friday, Ryan finds that “at this point there’s not much he can say about… where the present course is here or what are cuts gonna be going forward.” Ryan expects Powell will focus on breaking down the Fed’s meeting minutes and reaffirming their data-dependent approach to monetary policy decisions.
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This post was written by Angel Smith
