Synopsis:

Morgan Stanley forecasts a 160,000 increase in payrolls for the September jobs report, with average hourly earnings rising by 0.3% and the unemployment rate remaining steady at 4.2%.

Key Points:

• The report is expected to show solid payroll growth for September, with August likely revised upward, indicating that the weakness observed in July was not sustained.
• The payroll increase is anticipated to be driven by acceleration in manufacturing and services, though this growth may be tempered by the impact of up to 10,000 hotel strikers.
• If payrolls exceed 150,000, it would support a 25 basis point rate cut in November. Conversely, if payrolls are below 100,000, it could signal a more aggressive 50 basis point cut. Outcomes between 100,000 and 150,000 will require a more nuanced analysis.

Conclusion:

The upcoming jobs report is crucial for gauging the Fed's stance on potential rate cuts in November. Stronger-than-expected numbers could lead to a more measured easing approach, while disappointing figures might prompt a more significant cut.