The latest U.S. monthly jobs report is being eagerly awaited by investors this week following the hawkish speech delivered by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium last Friday. Powell stated that in an effort to slow inflation, he is willing to forego maximum employment in favor of price stability.
Expected to be released this coming Friday, the Labor Department’s latest monthly jobs report is expected to show a strong increase in U.S. employment, with nonfarm payrolls projected to rise by 300,000 in August according to Bloomberg data.
Despite a positive jobs outlook, Powell’s comments sent markets tumbling, with the Nasdaq falling by 3.9% and the S&P 500 losing 3.3%; marking the biggest decline for both markets since June 13.
“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses”, Powell explained at Jackson Hole. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
Although the growth of inflation has slowed down recently, it remains above the Federal Reserve’s target rate of 2%. Headline PCE remained up 6.3% on a year-on-year basis in July, while core PCE remains 4.6% higher.