Job Market's Reaction to Rising Rates

 Job Market's Reaction to Rising Rates

This week, the focus will be on official data on the U.S. labor market as investors examine the effects of the Federal Reserve's active push for interest rate increases to control inflation.

Continued strength would support the Fed's position that the economy should be robust enough to sustain raising rates because unemployment is still relatively low and wages are rising in what has so far been a tight labor market. On the other hand, indicators of deterioration can indicate that times will get harder.

On Friday, the Labor Department is scheduled to publish its highly-anticipated nonfarm payrolls data, which is expected to indicate that employers gained 250,000 jobs in July, down from 372,000 in June. It is expected that the rate of unemployment would stay the same at 3.6 percent. The typical rate of hourly income growth in July likely remained constant at 0.3 percent.

The Available Jobs and Labor Turnover Survey (JOLTS) report from the Labor Department are scheduled to be released on Tuesday, and it is anticipated that job openings fell from 11.3 million in May to 11 million in June.

Initial jobless claims for state unemployment benefits are anticipated to have decreased by 1,000 to 255,000 for the most recent week on Thursday, according to the Labor Department. As of the week ending July 23, ongoing claims increased to 1.37 million from 1.36 million the week prior. A hint that the tight job market may be relaxing is the fact that the number of new applications for unemployment benefits has remained close to its highest level of the year. According to the figures from last week, claims were higher than the pre-pandemic weekly average of 218,000 and at their highest level since November.

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