Economists at Bloomberg noted that the Fed will likely be more influenced by the strong nonfarm payrolls.
“The Fed, which appears to have underplayed the measurement issues plaguing the establishment survey, likely will be more influenced by the strength in nonfarm payrolls,” Bloomberg economists Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou wrote in a note. “That increases the risk that, down the line, Fed Chair Jerome Powell will be confronted with the sort of “unexpected” labor-market weakness that he said could precipitate rate cuts.”
Meanwhile, First American deputy chief economist Odeta Kushi believes the report alone will unlikely shift the Fed’s stance.
“From the Fed’s perspective, this is a mixed report. Strong job and wage growth could keep inflation concerns high,” Kushi said. “However, the uptick in the unemployment rate may offset those worries. Additionally, other labor market reports, such as the JOLTS report, indicate a still strong but gradually easing labor market.”
Kushi also noted that the participation rate, which measures the proportion of the population working or looking for work, fell slightly to 62.5%, while the rate for those aged 25-54 reached its highest level since 2002.
