Tomorrow’s jobs report will likely mean no quantitative easing announcement will come in September, at least if its anywhere near the current consensus estimate.Joe LaVorgna, Deutsche Bank’s Chief U.S. Economist, tells clients in a new note that if average job growth continued in August, the Federal Reserve will likely do little more than change its language.
Currently, estimates are for a 130,000 expansion during the month with unemployment to remain flat at 8.3 per cent.
The payrolls report due tomorrow is the last one Fed officials sitting on committee will have before they begin their September meeting.
From his note to clients (emphasis LaVorgna’s):
Presently, we anticipate strongly worded FOMC language that suggests the Fed will keep monetary policy accommodative, likely into late 2015, even in the face of evidence pointing to more robust growth. However, this expectation hinges upon our forecast for August payrolls to increase by approximately +150k (+160k private) and the unemployment rate to fall back to 8.2% (from 8.3% previously). If there is a sharp negative surprise from the employment figures, say payrolls come in below +75k and the unemployment rate rises a couple of tenths, then the Fed would undertake QE in addition to our expected language changes.
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