It is now practically certain: the Federal Reserve will cut the rates of 25 basis points in the meeting on September 16-17, after the split highlighted by the FOMC at the last meeting. A decision supported not only by market expectations, strengthened after Powell’s words by Jackson Hole, but also from the most recent numbers on the labor market, which confirm a slowdown phase. Scenario also endorsed also by the results of the beige book, the usual monthly investigation on the economic situation of the 12 districts of the Fed.
The weak numbers of vacant places
The U.S. Labor Department published the report on job openings (JOLTS) yesterday, from which it emerged that vacant places fell by 176 thousand units in July, reaching 7.18 million, well below the expectations that indicated an increase to 7.38 million. It is the minimum of the last twelve months (September 2024). Only in the last two months, the job offers have decreased by over 300,000 units, confirming the fulfillment recorded during the summer.
The number of layoffs remained relatively contained, even if for the first time by the pandemic there have been more unemployed than available places. Even people who have resigned and are changing work are almost stable.
What emerged from the beige book
Even the beige book of the Fed, published last night, confirmed a slowdown in the labor market, indicating that seven districts found that companies are reluctant to hire workers due to the weakest demand or uncertainty (on duties). Despite this, eleven districts have reported a “minimum or nothing net variation” of the overall employment levels, while a district spoke of “a modest drop” of the number of employed.
Two districts have reported an increase in layoffs, while other districts have reported a reduction in the staff due to the abandonment of the staff, encouraged, sometimes, by the return policies to the office.
More generally, most districts mentioned an increase in the number of people looking for work. However, half of the districts observed a reduction in the availability of immigrant labor with impacts especially on the construction sector.
Half of the districts described a modest growth of wages, given that it should encourage a containment of inflation, and most of the other districts have reported moderate growth. Two districts have noticed a minimum or nothing variation in wages.
Llofins and employment: Waiting for the Job Report
The data on layoffs and those and on unemployment, which precede the publication of the Job Report by one day, offered a downtown picture. Challenger’s data on layoffs reported in August the cut of 85,979 jobs, growing 39% compared to the previous month (62,075) and 13% compared to the same period of 2024 (75,891).
As for the weekly requests for sub -employment, they were equal to 237 thousand units, an increase of 8,000 compared to the 229 thousand of the previous week and compared to the 230 thousand expectations.
The ADP report on employment in the private sector, which precedes the official data of the Department of Labor by one day, shows that Gemployed by the private sector they recorded a increase of 54 thousand seats of work, after 104 thousand of the previous month, resulting lower than expected of analysts who indicated an increase in 73 thousand unit.
The Job Report, on the other hand, should report an increase in employees in the non -agricultural sector of 74 thousand units, not very varied compared to the 73 thousand of July. The increase in employment has been on average 35,000 jobs per month in the last three months, compared to the 123,000 recorded in the same period of 2024. It is also expected that the unemployment rate will rise to 4.3% from 4.2% in July.
Tax tasso fed now obvious
With these numbers, a cut of interest rates by the Federal Reserve is almost obvious. President Jerome Powell, the occasion of Jackson Hole’s symposium, had given an important signal of reversal of monetary policy, opening up to a cut of 25 points basis in September and perhaps another by the end of the year.
Two weeks after the FOMC meeting in mid-September, the future on the Fedwatch report without a doubt a cut of a quarter point, indicating with a probability of 97.6% a reduction in rates to 4-4.25% from 4.25-4.50% current.
According to the experts of General Investments, “The market has now almost completely taken a cut of the rates in the September meeting”, being the US rates already dropped last week of 10 points to 4.2%. “A second cut – it is said – is expected for December. We maintain a neutral position on US rates, with a preference for a slope of the curve on the rise; however, if the data on the labor market should be significantly due to expectations, rates in the United States could move outside the interval observed in recent weeks”.
