MNI: Philly Fed Survey Trims Year-End Jobless Rate Call

The story has been corrected to reflect the fact that headline and core PCE inflation is forecast to fall slightly faster than earlier expected by year-end.

U.S. unemployment is expected to rise to just 4.1% by the end of the year according to 37 forecasters surveyed by the Federal Reserve Bank of Philadelphia, improving from the last edition three months ago expecting a 4.4% jobless rate that was close to the FOMC's median estimates.

They now expect payrolls to come in at an average monthly pace of 217,800 in 2023, compared with 143,600 projected three months ago, and GDP to grow 1.3% in 2023, up from the earlier projection of 0.7%. Chances of a recession this year have also fallen several percentage points to around 40% by year-end. (See: MNI INTERVIEW: Will Take A Lot More To Hurt Jobs - Fed's Lubik)

Forecasters also see inflation moderating quicker with headline PCE inflation falling to 3.2% this quarter, down from the previous estimate of 3.8%. By year-end, the forecasters see headline and core PCE inflation falling to 2.6% and 2.5%, respectively, from 2.7% earlier.