US Hiring Likely Stayed Solid as Spending and Inflation Data Take Center Stage

What economists are watching this week

Forecasters expect about 90,000 payroll additions in September, following the biggest monthly gain since March in the prior report. They also project the jobless rate to remain at 4.1%, the lowest in a year. The hiring tailwind traces back to a still-busy real economy, where capital spending remains brisk and consumers are spending more. That setup has allowed the Fed to put inflation squarely at the center of its policy focus.

Spending and inflation data due midweek

On Wednesday, the Bureau of Economic Analysis is projected to show inflation adjusted personal spending rose 0.5% in August, which would be the largest monthly increase in just over a year. That report will also cover what the Fed considers its go-to inflation metrics - the PCE price index as well as the core reading excluding food and energy - and both are projected to quicken compared with July. Investors will comb through the data to gauge whether the Fed will follow this month's rate hike with another move at its October meeting. At present, traders see better-than-even chances of a 0.25 percentage point hike in the coming month.

Broader data and updates to watch

Bloomberg Economics, in a note from Anna Wong, Andrew Sacher and Eliza Winger, wrote: "With two months of data in hand, it appears consumers remained resilient in the third quarter, with real consumption on track to grow more than 3% annualized. Personal income probably accelerated 0.5% (vs. 0.4% prior), supporting consumers." Also on Wednesday, the BEA will publish revisions to second quarter GDP and release annual updates to national GDP back to early 2021, along with methodological changes to the way the consumer spending series and the PCE price index are compiled.

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Calendar items investors should note

A packed week also features August job openings on Tuesday and the ISM's September manufacturing survey on Thursday. Layer those onto the spending and inflation prints, and you get a clearer read on how long higher borrowing costs might linger - and what that could mean for paychecks, prices, and everyday budgets.

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