Tomorrow's August jobs report promises to be monumentally consequential; here's what to anticipate from it.

“[Friday’s report is being called] into question by an increasingly subdued labor market,” according to Giacomo Santangelo, economist with job search site Monster. “What the Fed should do in response and how they plan to adjust rates is at the center of this dialogue. Although job growth had already started slowing since 2024 began, its deceleration hit home with market participants after July payroll figures revealed only 114,000 job gains.” “Should this result in an economic slowdown, all eyes will turn toward the Federal Reserve for blame. Markets anticipate that when its September meeting ends on 18 September, the Federal Reserve will reduce benchmark rates by at least quarter of one percentage point and potentially even by up to one half point.” Since emergency cuts during Covid days, traders are pricing in cuts of approximately 2.25 percentage points off of the federal funds rate through 2025; futures contracts reveal this possibility. Current target overnight borrowing rates fall in a range between 5.25%-5.5%; an aggressive easing posture would signal not just efforts to return interest rates back towards normal levels from their 23-year high, but would also reflect deeper economic weakness. “The jobs being created do not match those displaced from work; we still face an acute skills deficit – something easily visible in health care,” according to Mr. Waddell. The number-one priority among job-seekers today is flexibility in employment opportunities. There’s often an unequal power dynamic between employers and job applicants. “Worries From Job SeekersWorkers in turn are becoming more pessimistic about the state of play in the labor market. According to Zeta Economic Index figures, which use artificial intelligence technology to track various economic metrics, concerns regarding jobs have increased quickly even though overall economy performance remains positive. A measure of job market sentiment declined 1.0% year over year according to their figures.” “Despite a remarkably resilient economy… concerns regarding job stability continue.” David Steinberg, co-founder and chairman of Zeta Global (compilers of this index), noted the decrease in job sentiment along with variable consumer behaviors as indicative of ongoing caution in the labor force. “While signs point toward a soft landing for the economy, ongoing concerns regarding job security continue to dampen optimism about wider economic recovery. Zeta data mirrors findings of a Conference Board survey which showed a marked reduction between those saying jobs are easy and hard to come by, respectively. Markets will pay attention Friday’s employment report but wage components have become less of an issue as inflation moderated; consensus forecast is for average hourly earnings to post 0.3% month-on-month gains with 3.7% year-over-year movements respectively – both increases of one percentage point higher than in July.” Don’t miss these insights from CNBC PRO!