05 October 2026 at 12:45PM
Decent or Grim – What's the job outlook for 2026?
Quarterly market outlook - third quarter 2026 "Second, we continue to see stabilization and positive trends in the U.S. labor market. Job growth has surprised to the upside over the quarter, and the unemployment rate has remained steady at about 4.3%. This has also supported consumer demand and solid economic growth, which we believe is also positive for cyclical sector performance." (Edward Jones)
9/4/26 The U.S. labor market and wage growth
We know that the Fed has a dual mandate: Maximum employment and price stability. The first part of this mandate refers to the labor market and specifically keeping the unemployment rate low without causing inflation. For this, the Fed uses a number of labor indicators, but perhaps one of the most important is the monthly nonfarm-jobs report.
The August nonfarm-jobs report: On Friday, the U.S. nonfarm-jobs report pointed to a healthy pickup in the labor market for the month of August. New jobs added totaled 162,000, well above forecasts of 55,000, and above last month's revised 21,000 jobs added. Notably, job gains came from a broad set of sectors including leisure and hospitality, government, and education and health services. Most of the 14 sectors showed gains, except for financial services and information (which include telecom, media, data, and internet services). (Edward Jones)
Source: U.S. Bureau of Labor Statistics, September 2026.
The unemployment rate remained steady at 4.1%, well below the long-term average U.S. unemployment rate of around 5.5%. This comes even as the labor force participation rate ticked higher, from 61.4% to 61.6%, implying that even with new entrants to the labor force, the demand for labor and supply of labor remain roughly balanced, keeping the unemployment rate steady.
Wage inflation? One of the key components of the job report that the Fed monitors is wage growth. If the labor market were running "hot," this may show up as rising wages, as employers have to increase salaries to remain competitive. These higher wages may lead to higher prices and wage-price inflation.
However, we have not seen this wage inflation play out in the current labor market. The August jobs report showed wage gains of 3.1% year-over-year, in line with forecasts and below last month's 3.2% reading. Wage growth has averaged about 3.5% this year, and the August reading was the lowest level since 2021.
Of note, wage gains have been outpacing headline inflation for much of the past three years, implying that consumers have seen positive real wages. This has shifted in the past few months, as CPI inflation has been elevated at around 3.4%, while wage gains have moved lower. However, if we expect inflation rates to gradually head back toward 2.0% levels, consumers should see positive real wage growth again too.
8/27/26 Jobless claims fall again as ‘no hire, no fire’ labor market traps workers
The number of people filing for U.S. unemployment benefits fell last week, remaining at historic lows as layoffs are rare and most Americans enjoy job security.
Jobless claims slipped to 203,000 last week from a revised 207,000 the week before, the Labor Department reported Thursday. The four-week average of claims, which smooths out week-to-week ups and downs, ticked up slightly to 205,500.
Claims for jobless benefits are a proxy for layoffs, and economists watch them because they can provide early clues of where the job market is headed. For the past year, claims have mostly been at a historically low range of around 200,000 to 230,000 a week.
The U.S. economy and job market have proved resilient in the face of high gasoline prices caused by the fighting with Iran. The U.S. unemployment rate is low at 4.1%. That is partly because President Donald Trump’s immigration crackdown and the ongoing retirement of baby boomers mean that fewer people are competing for jobs: More than 1.3 million people have dropped out of the U.S. labor force over the past year.
Companies, scarred by the surprise worker shortages that followed the end of COVID-19 lockdowns, are reluctant to let go of staff. But they aren’t hiring much either. So times are tough for Americans seeking to break into the job market and those who lost their jobs and are looking for new work. Economists describe a “no hire, no fire″ job market.
So far this year, employers — companies, nonprofits and government agencies — have added an average 61,000 jobs a month. That is an improvement on the 9,700 they averaged last year — the weakest hiring outside a recession since 2002 — when the lingering effects of high interest rates and Trump’s erratic trade policies discouraged companies from hiring.
When the Labor Department puts out the August jobs report next week, it’s expected to show that employers added another 65,000 jobs, according to a survey of forecasters by the data firm FactSet.
Hiring this year remains well below the 166,000 monthly jobs created, on average, in 2023 and 2024, let alone the 491,000 a month recorded during the 2021-2022 hiring boom that followed pandemic lockdowns. (LA Times)
9/3/26 Unemployment claims rise but remain at historically low levels
More Americans filed for unemployment benefits last week, but layoffs remain rare and jobless claims are still at historically low levels.The Labor Department reported Thursday that filings for benefits ticked up to 206,000 last week from a revised 204,000 the week before. The four-week average of claims, which smooths out week-to-week volatility, rose modestly to 207,250 last week.
Claims for jobless benefits are a proxy for layoffs, and economists watch them because they can be a sign of where the job market is headed. For the past year, claims have mostly stayed within a historically low range of 200,000 to 230,000 a week.
The number of people collecting unemployment benefits rose slightly to 1.78 million the week that ended Aug. 22, up by 8,000 from the week before.
Companies, remembering the worker shortages that followed the end of COVID-19 lockups, are still reluctant to let go of staff. The unemployment rate is low at 4.1%.
But employers aren’t eager to take on new workers. The Labor Department reported Tuesday that gross hiring — before subtracting people who lost or left their jobs — fell 5% to fewer than 5.1 million new jobs.
The result is what economists call a “no-hire, no-fire’’ labor market in which those have work enjoy job security but times are tough for young workers trying to land an entry-level job or unemployed people seeking to get back to work.
In July, companies, government agencies and nonprofits together cut 23,000 jobs. So far this year, employers are adding 61,000 jobs a month, up from the 9,700 they averaged last year — the weakest hiring outside a recession since 2002.
The lingering effects of high interest rates and Trump’s erratic trade policies discouraged companies from hiring in 2025.
When the Labor Department releases its report on last month’s hiring and unemployment Friday, it’s expected to show that employers added 65,000 jobs in August and that the unemployment rate ticked up to 4.2%, according to a survey of forecasters by the data firm FactSet.
Hiring this year remains well below the 166,000 monthly jobs created, on average, in 2023 and 2024, let alone the 491,000 a month recorded during the 2021-2022 hiring boom that followed pandemic lockdowns. (LA Times)
