Indeed Chief Economist Tara Sinclair's View Of Friday's Jobs Report

Benzinga recently spoke with Tara Sinclair, chief economist at Indeed – the largest job site in the world – about the monthly jobs report, which will be published on Friday.

The expert noted that this is an especially important jobs number, "because the Fed is looking at every single data point that’s coming out, and this is a key one that’s coming out just before the Fed has to make their next interest rate decision.”

'Yesterday' Versus Today

Looking back at where the U.S. economy is today as compared to where it was a few years ago, the analyst assured that the labor market has improved considerably. But, she continued, one question arises now: "Is this as good as it gets or is there still room for further improvement?"

She went on, "And that is really the question that the Fed has on their mind because they don’t want to choke off bears too soon. But, if we are already getting close to full employment, they need to start raising rates."

So, when observing Friday’s numbers, people will have to look well beyond the headline figures, because there are a lot of different possible scenarios that could play out, the analyst advised.

The Rate Hike Influence

Benzinga went on to ask about the relation between the jobs report and the rate hike. If estimates are blown out of the water, will the interest rate be hiked instantly, or will we need to see this for another quarter or two?

To this, Sinclair responded that "on the one hand, [...] in general, if this report doesn’t do anything particularly surprising, then obviously they are looking at other data to try and support their decision." In fact, some of the members of the committee have said that, while they see the labor market on track, they are worried about inflation. So, if inflationary pressures are not high, they won’t have a strong argument to move the rate just yet.

If Employment Figures Improve

However, if employment numbers ameliorate, while unemployment drops substantially, "that may not actually justify a rate hike in September, because it really depends on what’s happening underneath in terms of labor-force participation in wages." Actually, she added, these are the numbers she will be looking at carefully, and is hoping that the Fed is doing so too.

She expounded: If employers are able to hire people without raising wages, this means there is still a lot of people out there, out of the labor force who are willing to join the workforce, although they claim they are not looking at the time. So, she concluded, "I would hate to see the Fed move too soon and choke off the opportunity of bringing this people back into the labor force."

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