Slew of data to reinforce outlook for soft landing in US economy – BofA

Investing.com — A raft of incoming data this week is expected to bolster hopes for a so-called “soft landing” in the US economy, according to analysts at Bank of America.

Highlighting the economic calendar this week will be the latest US nonfarm payrolls report, which may offer a glimpse into the health of the labor market.

In a note to clients on Sunday, the BofA analysts said they anticipate that the figures could “add fuel” to expectations that the Federal Reserve was on course to quell inflation without sparking a broader downturn in the labor market or wider economy — a scenario known as a “soft landing.”

Economists expect the US economy to add 144,000 jobs in September, up slightly from 142,000 in the prior month. The unemployment rate, meanwhile, is seen matching August’s level of 4.2%.

In August, payrolls rose from a downwardly revised reading of 89,000 and were below forecasts of 164,000, while the jobless rate ticked down from 4.3%.

As a whole, the numbers indicated a downshift in labor demand — a trend identified recently by several Fed officials as a key driving force behind their decision to announce a jumbo 50-basis point interest rate reduction earlier this month. The Fed had previously raised rates to a more than two-decade high in a bid to combat price pressures.

Ahead of Friday’s non-farm payrolls report, markets will have the chance to parse through job openings and private sector hiring figures as well.

Meanwhile, investors will also be scrutinizing the September reading of the Institute for Supply Management’s manufacturing and services purchasing managers’ indices for further signals on the momentum of the American economy.

The BofA analysts projected that the ISM surveys will suggest weakness in the manufacturing sector but “an expanding services sector.”

The ISM manufacturing PMI, due out on Oct. 1, is seen coming in at 47.6, up from 47.2 in August but still below the 50-point mark separating contraction from expansion. Non-manufacturing PMI on Oct. 3 is tipped to edged up to 51.6 from 51.5 in the prior month.

“In short, we think the data will reinforce outlook for a soft landing,” the BofA analysts said.

“Economic momentum is cooling, not crumbling.”