Investors are eagerly awaiting Friday's employment report, as they look to learn how many jobs were created in August. Economists polled by Reuters are looking for nonfarm payrolls to increase by 210,000.
But while the market will likely cheer news of further employment gains, some experts warn that a too-hot report could take the wind of the market's sails—as "good news is bad news" proves to be the market meme that just won't die.
"I don't think we are" out of the good-news-is-bad-news cycle, said Michael Block, chief strategist at Rhino Trading Partners. "Because every time we get a little bit of good news, there's still this very hawkish crowd that talks about how imminent a rate hike is."
Generally, economists expect the trend of solid job growth to continue. A consensus number on Friday would mark the seventh straight month of plus-200,000 nonfarm payrolls growth. And while economists as a whole are expecting to see a near repeat of July's 209,000 jobs, some present a solid case that the number could come in a bit higher than that.
"There are no real reasons to believe that the 209,000 increase in payrolls in July, which was the smallest rise in four months, is the start of a sustained slowdown in job growth," wrote Paul Dales of Capital Economics, who expects to learn that 225,000 jobs were created. "Since the payrolls data tend to be volatile from one month to the next, we would place more weight on the six-month trend, which rose to an eight-year high in July."
Block says in order for the Federal Reserve to truly speed up its schedule for raising its fed funds rate target, "we'd have to have a number that would get to a much higher level—a 3-handle or a 4-handle—and that would have to be sustained."