The August jobs report has a history of being ugly, at first.
And on Friday, the Bureau of Labour Statistics will release the jobs report for August 2016.
This chart, via Citi, shows that the average monthly job gain has been the lowest in August since 2010.
This will be among the most crucial jobs reports of this year.
The Federal Reserve has said it’s ready to raise interest rates again soon, possibly at its meeting in September.
“If excuses are needed to avoid a policy tightening in the coming month, it should take very little to delay,” wrote Steven Wieting, Citi’s chief global chief investment strategist. “The routine historic anomaly of a weak preliminary reading for August job gains in the US could alone provide it.”
The Fed’s September meeting could be a no-show for rate hikes either way. Fed fund futures show a 61% chance of a rate hike in December, versus a 36% chance in September.
The median estimate among economists is for nonfarm payrolls to total 180,000 in August, according to Bloomberg. We’ve already had three months in 2016 below this forecast, notably the 24,000 print in May that was depressed in some part by a Verizon workers’ strike.
That means the historical trend may not hold again.
More importantly, economists expect that the pace of job growth will continue to slow compared to the last five years of the economic expansion, which the average in the chart above accounts for. That’s because the unemployment rate is near an eight-year low, meaning that most people who want and are searching for jobs already have one.