US jobs growth expected to have slowed sharply in October

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Jobs growth in the US is expected to have slowed sharply, in figures to be published on Friday that are likely to shape interest rate expectations.

Economists surveyed by Bloomberg are projecting that US employers added 180,000 new roles last month, or just over half the 330,000 added in September and down on jobs growth of 227,000 in August.

Such a scenario would fuel expectations that the Federal Reserve will hold interest rates at current levels through to the end of the year.

Jobs growth is an important indicator for investors and Fed rate-setters, who are monitoring the labour market for evidence that the central bank’s monetary tightening is cooling the economy.

The Fed has raised interest rates from near zero in March last year to a target range of 5.25-5.5 per cent in a bid to bring down inflation. But recent figures, including jobs data, have pointed to persistent resilience in the economy. Inflation was also slightly higher than forecast for September, and gross domestic product expanded faster than expected in the third quarter.

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The Fed held interest rates steady on Wednesday and along with other international peers is widely expected to keep borrowing costs at current levels for some time.

Speaking at a press conference after the decision, chair Jay Powell brushed aside concerns about the stronger-than-expected economic data, saying robust jobs growth reflected more workers coming off the sidelines and an uptick in immigration.

“That’s a big supply-side gain that is really helping the economy.”

Treasury secretary Janet Yellen has echoed this sentiment, telling the Financial Times in an interview last month that growth was a “positive, not a negative” that reflected “more people wanting to work and finding jobs”.

Financial markets have priced in bets that the Fed will hold off further rate increases, with officials shifting the debate towards how long to keep them at elevated levels.

The latest jobs figures from the Bureau of Labor Statistics will land at 8:30am Eastern Time on Friday.

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Even as the headline non-farm payrolls number is expected to slow, the unemployment rate for October is forecast to remain steady at 3.8 per cent. Average earnings are predicted to edge higher to 0.3 per cent, from 0.2 per cent in September.

Anomalies including recent strikes are also expected to have affected the numbers.

Economists at Citi wrote this week that they expected to see 160,000 new jobs in October, with that number roughly 30,000 lower due to striking car workers. November could see added gains if the strikes end as expected following recent deals between the union and carmakers.