The latest report on US employment, authored by Tiffany Wilding, economist at PIMCO, delivers mixed signals that leave overall labor market forecasts unchanged.
The payroll survey showed better-than-expected growth, with 227,000 new jobs compared to the forecasted 190,000. Meanwhile, the household survey, which provides a demographic breakdown of the labor force, revealed weaker performance, including a rise in the unemployment rate, consistent with PIMCO’s expectations.
A shifting labor market
Overall, the US labor market appears to be loosening, albeit stabilizing at a less rigid level. This situation provides the Federal Reserve with room to further lower interest rates, albeit at a more measured pace.
Projections suggest that the Fed is likely to implement another rate cut in December. However, policy uncertainty, sticky inflation in core services, and sustained wage pressures may lead to a slower pace of rate cuts in 2024.
What lies ahead
The combination of a less rigid labor market and declining inflation aligns with expectations for additional rate cuts. However, persistent price stickiness and a challenging global context may call for a more cautious approach.
PIMCO’s report emphasizes that despite signs of stabilization, uncertainty remains, warranting ongoing monitoring and adaptable monetary policy adjustments.
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