Goldman Sachs lowered the likelihood of the U.S. entering recession in the next 12 months by five percentage points to 15%, following the latest jobs report, which showed better-than-expected data.
In September, job creation in the United States saw its strongest growth in six months and the unemployment rate fell to 4.1%, according to the Labor Department report released Friday.
The September jobs report “reset the labor market scenario” and calmed fears that labor demand is “weakening too quickly to keep the unemployment rate from rising,” he said. said Jan Hatzius, Goldman Sachs’ chief U.S. economist, in a note dated Sunday.
The Wall Street brokerage maintained its forecast of consecutive cuts of 25 basis points to reach a terminal rate of 3.25-3.5% by June 2025.
“We now see much less risk of another 50 basis point rate cut,” Hatzius said.
The Federal Reserve cut its benchmark rate by 50 basis points in September to the 4.75%-5.00% range, its first rate cut since 2020.
Financial markets raised the odds of a quarter-percentage-point cut in November to 95.2%, up from 71.5% before the report, the CME Group’s FedWatch tool showed.
Although the employment figures have been volatile, they can be taken at face value as there are no clear indications of further negative revisions persisting, the Wall Street brokerage said.
“More generally, we see no obvious reason for employment growth to be mediocre at a time when job openings are high and GDP (gross domestic product) is growing strongly,” Hatzius said. .
However, October is likely to be particularly complicated, with a hurricane and a major strike threatening to depress employment figures, the brokerage warned.
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