Seoul Gazette - Cooling US jobs market in focus as political scrutiny heats up

But the jobs report is set to attract heightened scrutiny, after a poor showing last month prompted Trump to claim the numbers were "rigged" and take the unprecedented action of firing the commissioner of labor statistics.

US job growth missed expectations in July, while revisions to hiring figures in recent months brought them to the weakest levels since the Covid-19 pandemic.

Hours after the data release, Trump charged that Commissioner Erika McEntarfer had "faked" jobs data to boost Democrats' chances of victory in the recent presidential election.

He also pointed to the downward revisions to hiring numbers, saying that similar things have happened this year -- amid his return to the presidency in January -- and "always to the negative."

But Nationwide chief economist Kathy Bostjancic told AFP that data revisions take place as survey response rates have declined.

If companies respond late, numbers have to be updated to reflect incoming data.

"I've never viewed the data as being politically determined or influenced," she said. But she conceded that "there's room for improvement in data collection."

- 'Fragile balance' -

For now, EY chief economist Gregory Daco anticipates Friday's report "to confirm that a marked slowdown in labor market conditions is underway."

This comes as business leaders "continue to restrain hiring" as they grapple with softer demand, higher costs and interest rates, he wrote in a note.

Trump's stop-start approach to rolling out tariffs has snarled supply chains and made it tough for businesses to plan their next moves. Many firms said they have been forced to put growth plans on hold.

A Briefing.com consensus forecast expects US hiring to pick up slightly to 78,000 in August from 73,000 in July.

The unemployment rate, meanwhile, is anticipated to edge up from 4.2 percent to 4.3 percent.

While this appears to be an improvement, KPMG senior economist Kenneth Kim told AFP that "last year, the average payroll gain per month was 168,000."

The average so far this year, he said, was 85,000 -- about half the pace seen in 2024.

"Recent data highlights a fragile balance in the labor market: labor demand and supply have become subdued, while layoffs remain limited," Daco said.

"Increasingly, job creation is concentrated within a couple of private-sector industries," he added.

He also warned that the labor force participation rate will likely edge down as stricter immigration policies under the Trump administration increasingly constrain worker flows in the coming months.

- Rate cut incoming -

If Friday's data came in as expected, "there's a very high probability" that the Federal Reserve will lower interest rates at the end of its policy meeting from September 16-17, said Kim of KPMG.

Since its last cut in December, the US central bank has held interest rates steady at a range between 4.25 percent and 4.50 percent.

In doing so, Fed policymakers have been balancing between risks of inflation and a deteriorating jobs market.

Economists have warned that Trump's wide-ranging tariffs on imports could fuel inflation and bog down economic growth over the long run.

The Fed is monitoring the duties' effects on consumer prices as officials mull the right timing for their next rate cut, despite Trump's growing calls for swift and significant reductions.

A jobs report signaling a tepid labor market would likely support the need for a cut to boost the economy, while a surprisingly strong showing might instead tip the odds in the other direction.

S.Yang--SG