US employment data — set for release yesterday — was expected to confirm a cooled labor market, as companies pull back on hiring amid continued uncertainty over US President Donald Trump’s tariffs.
However, the jobs report is set to attract heightened scrutiny, after a poor showing last month prompted Trump to claim the numbers were “rigged” and take the unprecedented action of firing the commissioner of labor statistics.
US job growth missed expectations in July, while revisions to hiring figures in the past few months brought them to the weakest levels since the COVID-19 pandemic.
Photo: Bloomberg
Hours after July’s data release on Aug. 1, Trump charged that then-commissioner of labor statistics Erika McEntarfer had “faked” jobs data to boost Democrats’ chances of victory in the recent presidential election.
He also pointed to the downward revisions to hiring numbers, saying that similar things have happened this year — amid his return to the presidency in January — and “always to the negative.”
However, Nationwide Mutual Insurance chief economist Kathy Bostjancic said that data revisions take place as survey response rates have declined.
If companies respond late, numbers have to be updated to reflect incoming data.
“I’ve never viewed the data as being politically determined or influenced,” she said, but conceded that “there’s room for improvement in data collection.”
EY-Parthenon chief economist Gregory Daco said he expected last month’s report “to confirm that a marked slowdown in labor market conditions is under way.”
This comes as business leaders “continue to restrain hiring,” as they grapple with softer demand, higher costs and interest rates, he wrote in a note.
Trump’s stop-start approach to rolling out tariffs has snarled supply chains and made it tough for businesses to plan their next moves. Many firms said they have been forced to put growth plans on hold.
A Briefing.com consensus forecast predicted a slight pickup in hiring to 78,000 last month from 73,000 in July.
The unemployment rate was expected to edge up from 4.2 percent to 4.3 percent.
While this would appear to be an improvement, KPMG senior economist Kenneth Kim said that “last year, the average payroll gain per month was 168,000.”
He said the average so far this year is 85,000 — about half the pace seen last year.
“Recent data highlights a fragile balance in the labor market: labor demand and supply have become subdued, while layoffs remain limited,” Daco said.
“Increasingly, job creation is concentrated within a couple of private-sector industries,” he added.
He added that the labor force participation rate would likely edge down as stricter immigration policies under the Trump administration increasingly constrain worker flows in the coming months.
If last month’s data came in as expected, “there’s a very high probability” that the US Federal Reserve would lower interest rates at the end of its policy meeting from Sept. 16 to 17, Kum said.
Since its last cut in December last year, the US central bank has held interest rates steady at a range of 4.25 percent to 4.5 percent.
In doing so, Fed policymakers have been balancing between risks of inflation and a deteriorating jobs market.
Economists have warned that Trump’s wide-ranging tariffs on imports could fuel inflation and bog down economic growth over the long run.
The Fed is monitoring the duties’ effects on consumer prices, as officials mull the right timing for their next rate cut, despite Trump’s growing calls for swift and significant reductions.
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