Investing.com — Richmond Federal Reserve president Tom Barkin said Friday that the July jobs report showing a significant slowdown in job gains was “reasonable,” and downplayed calls for the Fed to deliver aggressive rate cuts at upcoming meetings.
The July official jobs report showed that fewer jobs were created last month than expected, with rising 114,000 last month, the lowest since January 2021, and down from a revised 179,000 in June. Economists had seen the July number at 177,000.
The also rose to 4.3%, up from 4.1% in June, marking the fourth-straight uptick. While the month-on-month average hourly wage growth came in at 0.2%, a drop from 0.3% the previous month.
“More significant reductions typically would be associated with an economy that feels like it’s deteriorating rapidly. And again, 114,000 jobs, while not as good as we’ve been running, on a long-term basis, is a reasonable number,” Barkin said Friday in a interview with the New York Time’s Jeanna Smialek.
The data prompted Citi to change its forecast for rate cuts, now expecting the Fed to deliver three cuts this year.
“Following this report we think the Fed will cut at least three times in 2024 – September, November and December – in a more front-loaded effort to secure the soft landing. Further we think there is now a realistic possibility that the first move will be a 50bp cut in September,” Citi said.
The Richmond Fed president didn’t endorse the idea of more aggressive cuts, saying voting Fed members will likely look to the August jobs numbers for more evidence on the pace of slowing in the labor market.
The August jobs data will come ahead of the Sep. 17-18 Fed meeting.