And Now, it's Jobs Week | SouthState Securities

After last week’s full calendar of Jackson Hole, the Fed’s preferred inflation reading, and an update to 2^nd quarter GDP, attention shifts to the employment side of the Fed’s mandate with several job-related reports. It must be said, however, that with inflation the current focus of the Fed, and that was made even more clear with Warsh’s address at Jackson Hole, price pressure is clearly driving the hike/no hike bus right now. Thus, this week’s data flow will be heavy but not so impactful unless we get an unexpectedly weak August jobs report on Friday. The data flow starts tomorrow with ISM Manufacturing and continues through Friday with the nonfarm payrolls report. We discuss some of those highlights below along with what we learned from Jackson Hole. Currently, the 10yr is yielding 4.72%, unchanged on the day, while the 2yr is yielding 4.32%, down 2bp on the day.

Fed Chair Kevin Warsh’s Jackson Hole address managed to check off most of the boxes markets were looking to hear. While he kept somewhat to his less-is-more approach he did make clear a few things that maybe he didn’t stress enough at the July press conference, which shows he’s a quick study on what the market expects and that’s a key skill for any incoming Fed chairman. And while he didn’t fully meet the market’s wish list of a fully revealed reaction function and forward guidance, he did reiterate that getting PCE inflation back to 2% is Job 1 right now and there was no equivocation on that.

Warsh touched on the labor market and stability there as evidenced by the low and stable unemployment rate and that allowed him to pivot to the price stability mandate as the area of Fed focus. Investors heard that loud and clear and thus odds of September rate hike moved from 36% prior to the speech to 58% just after. This morning, those odds have ticked even higher to 60%. The markets now look to the August inflation reports to make the final hike/no hike call. At this point, it’s our view that it would take a frigidly cold CPI report to force a pause at September’s meeting. That report is due on the inauspicious date of September 11^th.

The deluge of August data begins tomorrow morning with ISM Manufacturing at 10am ET. Expectations are for the headline survey to change little from 55.6 to 55.4, indicating solid expansion continuing in the manufacturing sector. This has become a feature in recent months as orders initially surged to beat anticipated price increases following the start of hostilities in the Middle East and an assist from the AI buildout of data centers. The sub-indices like Prices Paid (71.9 in July), New Orders (56.7) and Employment (52.8) will be updated as well.

The Job Openings and Labor Turnover Survey for will also arrive tomorrow. Job openings are expected to slip slightly from the 7.359 million level in June to 7.300 million, keeping it near 1-to-1 with the number of unemployed. At the peak of labor market tightness coming out of the Covid lockdowns, openings rose over 12 million, so the slide since then is another indication of slowing labor market momentum, but also a labor market approaching an equilibrium state. The sub-indices like the Quits Rate (2.0% in June), and Layoff Rate (1.1%) will be assessed as well to see if there is any uptick in layoffs and/or a slide in worker confidence in finding another job. Such a trend has not been indicated by initial jobless claims which have been hovering around the 200 thousand level in recent weeks.

Before the Friday employment report, we’ll get ADP’s Employment Change reading for August on Wednesday. Expectations are that private sector job growth slowed from 44 thousand in July to 39 thousand in August. The ADP Pulse report of weekly job growth has been trending around the 10 to 15 thousand per week range so a monthly total of 40 to 60 thousand seems possible. The BLS expectation of private sector job growth is similar at 50 thousand vs. 30 thousand in July.

On Thursday, the ISM Services Survey for August is expected to see the headline reading increase slightly from 54.1 to 54.3, indicating continued modest to solid expansion in the service sector, like the expectations for the manufacturing sector. The sub-indices like Prices Paid (70.3 in July), New Orders (57.2) and Employment (a disappointing 47.4 in July) will be updated as well.

On Friday, August Nonfarm Payrolls are expected to show 60 thousand new jobs vs. -23 thousand in the disappointing July report. Recall that part of the negative July jobs print came from job losses in government (which was blamed on bad seasonals on teaching jobs in the summer), and leisure and hospitality due in part to the concluding World Cup. Private payrolls are expected to increase 50 thousand vs. 30 thousand and the unemployment rate is expected to increase a tenth to 4.2% as some labor force growth returns with not all the new entrants finding immediate employment. Average hourly earnings are expected up 0.2% MoM vs. a disappointing 0.1% July print while annual earnings are expected to be unchanged at 3.2%.

Finally, let’s review the preliminary BLS payroll adjustments for the period April 2025 to March 2026 that were released on Friday. Expectations were that the aggregate adjusted payroll would add around 180 thousand to the originally published results. Alas, the release disappointed with another negative adjustment, this time, however, it was a more modest final reading of -79 thousand with private employment down -178 thousand. These adjustments come annually as the BLS gets more complete employment data from state unemployment tax records which constitute nearly all employers in the US. The figures released Friday are preliminary with the final figures published as part of the January 2027 payroll report. Recall, in the last two years (2025 and 2024), adjustments were much larger to the negative (-911 thousand in 2025 and -818 thousand in 2024). The smaller adjustment this year primarily reflects the slowing job growth through much of last year, but the negative adjustment means the modest job growth was even smaller than initially posted by an average of 6,600 per month.

Published: 08/31/26 Author: Thomas R. Fitzgerald