Analysts’ Projections for the Upcoming Non-Farm Payroll

Investing.com — Citi analysts projected that for the upcoming Non-Farm Payroll (NFP), there will be 125,000 new jobs and an unemployment rate of 4.3%.

According to Citi, “The pivot from inflation to jobs is complete,” indicating a shift in focus from inflation metrics to employment data for Federal Reserve policy decisions.

Citi’s projection suggests that job growth of 125,000, combined with an unemployment rate of 4.3%, would be soft enough for the Federal Reserve to cut interest rates by 50 basis points.

The analysis states that if the unemployment rate decreases marginally to 4.2%, the Fed may opt for a smaller 25 basis point cut, although this would not change Citi’s outlook for ongoing loosening in the labor market and a broader economic slowdown.

The bank notes that volatility in the labor market has become as pronounced as that surrounding inflation data in recent years.

Citi emphasizes that “relatively small differences in Friday’s jobs reading could materially affect Fed policy.”

For instance, if the unemployment rate remains at 4.3% but payrolls improve to around 175,000, the Fed is likely still to implement a 50 basis point rate cut.

Conversely, if payrolls fall below 125,000 with a 4.2% unemployment rate, a larger cut could be considered.

The bank also points out that broader labor market trends show a steady weakening, with slowing hiring, declining hours worked, and rising unemployment.

Citi states, “We know from past cycles that once this cycle begins it has always progressed to a US recession.” The jobs report on Friday and JOLTS on Wednesday will help assess if this trend continues.