Fed expected to pause again, key global data ahead

investmentnews.com:

Employers in the US probably tempered their pace of hiring this month after beefing up payrolls by the most since the start of the year, consistent with a sturdy labor market that’s powering economic expansion.

Government data on Friday are projected to show payrolls in the world’s largest economy increased by about 190,000 in October, still-solid job growth that follows sizable advances in the previous three months.

Hourly earnings are seen rising at the slowest annual pace in more than two years, partly a reflection of increased labor force participation. Moderating pay gains help explain why Federal Reserve policymakers are projected to again hold interest rates steady on Wednesday following their two-day meeting. 

The resilient labor market has been instrumental in keeping consumers spending and the economy growing as inflationary pressures gradually wane. Steady hiring is also a reason economists are more sanguine about the outlook, with recession odds having eased since June.

Economists will also watch a report on third-quarter employment costs on Tuesday for signs of cooler wage growth. Labor costs are the biggest expense for employers, and any acceleration risks keeping inflation elevated. The government’s latest reading on productivity will also give an indication of how successful firms are in mitigating some of those increased costs.

The gradual loosening of tight labor conditions may be reflected in a separate report in the coming week. Job openings in September are seen declining from the prior month toward levels not seen since March 2021.

What Bloomberg Economics Says:

“Wage growth is a more accurate signal of labor-market conditions. Both the Fed’s preferred Employment Cost Index and average hourly