Nonfarm Payrolls Test Looms As Fed Keeps Its Focus On Inflation
- Payrolls expected to rebound after July decline - Benchmark revision could break recent negative streak - Warsh prioritises inflation risk over labour market - Waller leaves the door open to a September hold
By Harry Daniels LiveSquawk News @HarryDaniels71
19:00 GMT | 3 September 2026
Friday’s jobs report will likely hold less significance than next week’s inflation report but is still seen shaping the narrative ahead of this month’s FOMC meeting, if the US produces another negative figure.
The consensus estimate for payrolls is 55,000, in what would be a rebound from last month’s fall of 23,000. The unemployment rate is forecast to hold steady at 4.1%, with average hourly earnings seen at 0.3% m/m and 3.1 y/y. The private payroll number is estimated to have gained 50,000 workers in August.
Alongside the headline number, the Bureau of Labor Statistics will release the preliminary benchmark estimates for 2026. BMO’s Sal Guatieri noted that recent years have seen sizeable downward revisions but predicted the negative streak could end this year.
“We estimate the March 2026 payrolls level could increase by about 200,000, implying an upward adjustment of 17,000 per month. Pre-revision, nonfarm payrolls grew an average of just 18k per month, so that pace is expected to double… but that still won’t meaningfully change the current low-hiring trend,” the BMO economist advised.
Policymakers pivot to price risks
In his keynote speech at Jackson Hole last week, Fed Chairman Kevin Warsh chose to highlight inflation risks over the low-lying labour market. He noted that, in general, people who want to work, by and large, are holding or finding jobs.
On inflation, he remarked that it remained too high. And on recent softer data, he said, “…do not tell me that underlying trends have meaningfully improved.”
Justin Weidner, an economist at Deutsche Bank, posited that should Friday’s labour market data come in close to expectations, it will reinforce monetary policymakers’ view of a stable labour market that is consistent with their maximum employment mandate. With inflation running above the central bank’s 2% target, Warsh reiterated that the Fed's predominant focus right now should be on prices.
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
Slightly counterbalancing the argument that the Fed is shifting toward a hike, Vice Chair Christopher Waller said, "We will get another employment report and inflation reading before the next FOMC meeting. I don't expect that the employment data will deviate much from what we have been seeing. So, my decision on the appropriate policy stance will be heavily influenced by what we learn about August inflation. If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level.”
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- Payrolls expected to rebound after July decline
- Benchmark revision could break recent negative streak
- Warsh prioritises inflation risk over labour market
- Waller leaves the door open to a September hold
By Harry Daniels
LiveSquawk News
@HarryDaniels71
19:00 GMT | 3 September 2026
Friday’s jobs report will likely hold less significance than next week’s inflation report but is still seen shaping the narrative ahead of this month’s FOMC meeting, if the US produces another negative figure.
The consensus estimate for payrolls is 55,000, in what would be a rebound from last month’s fall of 23,000. The unemployment rate is forecast to hold steady at 4.1%, with average hourly earnings seen at 0.3% m/m and 3.1 y/y. The private payroll number is estimated to have gained 50,000 workers in August.
Alongside the headline number, the Bureau of Labor Statistics will release the preliminary benchmark estimates for 2026. BMO’s Sal Guatieri noted that recent years have seen sizeable downward revisions but predicted the negative streak could end this year.
“We estimate the March 2026 payrolls level could increase by about 200,000, implying an upward adjustment of 17,000 per month. Pre-revision, nonfarm payrolls grew an average of just 18k per month, so that pace is expected to double… but that still won’t meaningfully change the current low-hiring trend,” the BMO economist advised.
In his keynote speech at Jackson Hole last week, Fed Chairman Kevin Warsh chose to highlight inflation risks over the low-lying labour market. He noted that, in general, people who want to work, by and large, are holding or finding jobs.
On inflation, he remarked that it remained too high. And on recent softer data, he said, “…do not tell me that underlying trends have meaningfully improved.”
Justin Weidner, an economist at Deutsche Bank, posited that should Friday’s labour market data come in close to expectations, it will reinforce monetary policymakers’ view of a stable labour market that is consistent with their maximum employment mandate. With inflation running above the central bank’s 2% target, Warsh reiterated that the Fed's predominant focus right now should be on prices.
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
Slightly counterbalancing the argument that the Fed is shifting toward a hike, Vice Chair Christopher Waller said, "We will get another employment report and inflation reading before the next FOMC meeting. I don't expect that the employment data will deviate much from what we have been seeing. So, my decision on the appropriate policy stance will be heavily influenced by what we learn about August inflation. If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level.”