September jobs preview: hiring, revisions and wages face the Fed’s inflation test

The September U.S. jobs report, due Friday, October 2 at 8:30 a.m. Eastern, will offer the next test of whether August’s pickup in hiring was sustained after the Federal Reserve raised interest rates last month. The useful comparison will extend beyond the new payroll number: revisions, labor-force participation and wages can change the meaning of an apparent hiring surprise.

A forecast against an unusually strong August

Economists surveyed by FactSet expect September payroll growth of 90,000 and an unemployment rate of 4.1%, the Associated Press reported on October 1. Those are survey expectations, not released results; they should not be treated as a universal forecast shared by every economist.

The official August baseline is a gain of 162,000 nonfarm payroll jobs and unemployment of 4.1%, as reported by the Bureau of Labor Statistics on September 4. BLS said that month’s hiring exceeded the average monthly increase of 31,000 over the preceding 12 months. A September gain near the surveyed forecast would therefore represent slower hiring than August, but still exceed that earlier average. It would not, by itself, establish a contraction in employment.

August’s industry detail also gives readers a useful check on the breadth of any September change. Food services and drinking places added 59,000 jobs, while local government education added 42,000, largely reversing a decline the month before. Information employment fell by 23,000. Sustained hiring across industries would carry a different message from another headline supported heavily by a few categories.

Revisions can change the starting point

The August release raised the combined June and July payroll estimates by 55,000. July’s estimate moved from a decline of 23,000 to an increase of 21,000; June’s rose from 20,000 to 31,000. Those are revisions published last month, not changes announced in today’s still-pending release.

BLS revises initial monthly payroll estimates in each of the next two months as more employer responses arrive and seasonal factors are recalculated. Friday’s release should therefore be read for changes to the earlier estimates as well as the September figure. A strong headline alongside downward revisions could tell a less robust story about the recent hiring trend than the headline alone; upward revisions could work in the other direction.

Pay, hours and participation fill out the picture

Average hourly earnings for all employees on private nonfarm payrolls rose 0.3% in August to $37.75, putting annual growth at 3.1%. The average workweek edged up to 34.4 hours. Those are the dated baselines for judging whether September brings firmer pay growth, a change in hours, or both.

The unemployment rate comes from the household survey, while payroll jobs, wages and hours come from the establishment survey. They measure different things and need not move in lockstep. In August, labor-force participation was 61.6%, up over the month but down 0.5 percentage point since January. Readers should check whether a change in unemployment reflects changing employment, changing participation, or some combination, rather than assigning a cause from the rate alone.

A rates input, not a policy decision

On September 16, the Fed raised its target range by a quarter percentage point to 3.75%–4%, saying inflation remained elevated. Its next scheduled meeting is October 27–28. The September jobs release will arrive before that meeting, but it cannot settle the policy decision on its own.

As a conditional market interpretation, stronger hiring accompanied by firmer wage growth could reinforce the argument for maintaining restrictive policy. Weaker hiring, higher unemployment and softer wages could strengthen the argument for caution about further tightening. These are possible interpretations of combinations of data, not forecasts of the report, the Fed’s vote or a guaranteed market move. Payroll growth alone does not measure inflation.

The first read at 8:30 should pair the new job count with revisions, then check unemployment and participation against the earnings and hours data. Until BLS publishes the release, September’s actual numbers and any resulting market reaction remain unknown.