Hodge projects payrolls will grow by 60,000, cooling from the rapid pace seen in August yet maintaining momentum in sectors like manufacturing and construction. While the data center buildout bolsters these industrial areas, he anticipates a decline in hiring within leisure, hospitality, and local government. Despite these gains, underlying labor market softness persists, evidenced by tepid wage growth and consumer sentiment surveys indicating workers view job opportunities as scarce.

Inflation remains the Fed’s primary focus, and Hodge suggests officials are comfortable with current labor market stability. Even if the unemployment rate edges toward 4.2% as participation rates normalize, the central bank is expected to favor a pause at the October FOMC meeting. Barring a broad-based, unexpectedly high CPI print on October 14, policymakers are likely to defer further action until December to avoid political optics ahead of the mid-term elections. For an October hike to materialize, the payroll data would need to demonstrate a rare combination of higher participation, stable unemployment, and significant wage acceleration, a scenario Natixis views as improbable.