Data on the U.S. labor market could signal how aggressive the Federal Reserve will be when deciding if they should cut interest rates in November, after already announcing a rate cut of 50 basis points in September.

The Bureau of Labor Statistics is set to release the official September jobs report on Friday at 8:30 a.m. ET.

September Jobs Report Estimates: Economists predict a decline in the monthly new nonfarm payrolls from 142,000 in August to 140,000 in September, according to Trading Economics.

The unemployment rate is expected to hold steady at 4.2%.

A private sector payroll data report earlier this week showed 143,000 jobs added for the month of September. The report showed 42,000 goods-producing jobs added and 101,000 service-producing jobs added. The 143,000 private sector jobs added were up from 99,000 in August.

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What Experts are Saying: Recent reports, like the ISM Survey, that show economic growth and increased price pressures could lead to an argument for more gradual interest rate cuts, Comerica Bank Chief Economist Bill Adams said.

"The Fed will be glad to see signs that lower rates are quickly passing through to private sector activity," Adams said.

Adams said the Federal Reserve is still "balancing the risk" of inflation rising again with soft job markets.

The economist predicts that hiring will rebound in 2025 in industries like housing, manufacturing and consumer goods due to the interest rate cycle.

"The September job report is too early to see that rebound start, though."

Adams forecasts 150,000 nonfarm payroll jobs added in September and an unemployment rate of 4.2%.

"But even with modest job growth last month, it's getting hard to call this economy anything but a soft landing."

The impact of Hurricane Helene, Boeing workers striking and doc workers striking could also lead to fluctuations in monthly economic data, Adams added.  

LPL Financial Chief Economist Jeffrey Roach said employment demand is slowing in the manufacturing sector due to hiring freezes.

"We should expect a soft employment report this Friday with fewer hirings and a slightly higher unemployment rate. The Fed will likely cut by a quarter point at each of the remaining meetings this year, unless we see unexpected deteriorating conditions," Roach said.  

He added that the jobs report won't likely change the odds of a 25-basis-point cut in November, and also might not have a big impact on the stock market.

"Investors are already primed for a weak payroll number so unless we get an outlier, market reaction could be muted."

What's Next: Markets are anticipating another Fed interest rate cut in November. The CME FedWatch tool shows a 67.1% probability of a 25-basis-point rate cut in November, with a 32.95% probability of a 50-basis-point cut predicted.

If the nonfarm payrolls are weaker than expected, the case for a 50-basis-point rate cut in November could increase. If the nonfarm payrolls are better than expected, the case for a 25-basis-point rate cut would likely increase.

Federal Reserve Chairman Jerome Powell highlighted that several reports like the jobs report would come out ahead of the November Federal Open Market Committee (FOMC) meeting and would be used to determine additional interest rate cuts.

SPY Price Action: Ahead of the nonfarm payroll jobs report, the SPDR S&P 500 ETF Trust ( SPY ) is trading at $568.58 Thursday, nearly flat on the day. The ETF has traded between $409.22 and $574.71 over the last 52 weeks and is up 20.0% year-to-date in 2024.

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