ATFX - Non-farm payroll data may plunge in the coming months! The Federal Reserve is expected to usher in the trend it most wants to see

atfxA key leading indicator is "flashing a red light" indicating that strong non-farm payroll growth could come to an end in the coming months, according to the research firm.

According to a report released by Ned Davis Research on Friday,The strong job growth in the U.S. labor market over the past three years is likely to come to an end in the coming months.

The investment research firm claims a key leading indicator is "flashing a red light"Hiring activity is likely to slow down, and this indicator is the hiring activity of temporary help services.

“The most unemployed are temporary help servicesHistorically, this is not a good sign, "said Joseph Kalish, chief global macro strategist at NDR.

The recent slowdown in temporary help services comes amid ongoing labor strikes, bad weather, and a possible downgrade to monthly employment data.

“Despite the apparent slowdown in job growth, there is still reason to believe that July's data was overstated, underlying growth is weaker, and further deceleration is possible in the coming months"Seasonal adjustments, weather, corrections and strikes could all affect this trend," Kalish said.

Kalish believes that while warmer weather typically helps promote seasonal employment, this summer's extreme heat could have the opposite effect, as patrons at outdoor venues may decrease.

Signs of slowing job growth have been evident over the past two months, because the three-month average of non-farm payroll gains over the past two months fell by 10,000 each month. The two most recent jobs reports also fell short of economists' expectations, ending more than a year of better-than-expected job growth.

Other factors that could limit future job growth include tighter lending standards and a possible strike by the United Auto Union and other unions.

And finally.The decrease in average weekly working hours is another leading indicator that has been falling recently, which is not a good sign.

"Employers are more willing to work fewer hours than lay off workers. But in a way,Once further reductions in working hours become impractical, layoffs will increase"Companies stop hiring before they start laying off workers," Mr. Kalish said.

Many stock market bulls pointed out that,A strong job market and a resilient economy are good reasons to go long on the stock market, but if the job market does weaken, that could change soon。