Don’t expect September jobs report to be decisive for Fed’s November move: BofA By Investing.com

Investing.com — In a note on Tuesday, Bank of America analysts downplayed the significance of the upcoming September jobs report in determining the Federal Reserve’s next move in November.

According to BofA’s latest “Labor Market Watch” note, while the September report may offer some insights into the labor market, it is unlikely to be a decisive factor for the Fed’s decision on whether to raise rates again this year.

BofA forecasts nonfarm payrolls will increase by 150,000 in September, slightly up from the 142,000 added in August.

Public sector hiring is expected to rise by 20,000, primarily driven by local government employment, while private payrolls are predicted to increase by 130,000.

“Health & education and government sectors will continue to drive payroll numbers,” the analysts noted, though these sectors are showing signs of slowing down after catching up to pre-pandemic trends.

Despite these numbers, BofA expects the unemployment rate to remain unchanged at 4.2% due to low layoffs and a projected slight decline in the labor force participation rate.

The stability in the unemployment rate is said to align with the forecast for modest hiring in sectors like education and healthcare, as well as minimal layoffs across industries.

Even if the September jobs report exceeds expectations, the BofA analysts believe the report won’t push the Fed decisively toward another rate hike.

“A stronger-than-expected September jobs report would probably push market pricing toward a 25bp cut in November, rather than 50bp. But we don’t think the September jobs report will be decisive for the Fed’s November move,” they wrote, pointing to the importance of other data points like September inflation and the October jobs report in shaping the Fed’s ultimate decision.

BofA concluded: “We don’t think the Sep jobs report will be decisive for the Fed’s November move. We will get several additional data points before the November meeting, including the September inflation data and the October jobs report.”