Thursday, October 03, 2013

Employment Situation

by Bill McBride on 10/03/2013 05:00:00 PM

Important Note: The employment report will be delayed. If the government shutdown lasts into the week of the 12th (when employment data is collected), it is unclear if there will be an October employment report.

Tomorrow (Friday), at 8:30 AM ET, the BLS will NOT release the employment report for September. The consensus was for an increase of 178,000 non-farm payroll jobs in September, and for the unemployment rate to be unchanged at 7.3%.

Although the employment report will be delayed, here is a summary of recent data:

• The ADP employment report showed an increase of 166,000 private sector payroll jobs in September. This was below expectations of 175,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any particular month. But in general, this suggests employment growth slightly below expectations.

• The ISM manufacturing employment index increased in September to 55.4% from 53.3% in August. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll jobs increased about 10,000 in September.

The ISM non-manufacturing employment index decreased in September to 52.7% from 57.0% in August. A historical correlation between the ISM non-manufacturing index and the BLS employment report for non-manufacturing, suggests that private sector BLS reported payroll jobs for non-manufacturing increased by about 145,000 in September.

Taken together, these surveys suggest around 155,000 jobs added in September, somewhat below the consensus forecast.

Initial weekly unemployment claims averaged 308,000 in September. This was down from an average of 323,000 in August, and is at the lowest level since early-2007 (before the recession).

For the BLS reference week (includes the 12th of the month), initial claims were at 311,000; the lowest level in years (although there were reporting issues that have since been resolved).

• The final September Reuters / University of Michigan consumer sentiment index decreased to 77.5 from the August reading of 82.1. This is frequently coincident with changes in the labor market, but also strongly related to gasoline prices and other factors (like threats from the House).

• The small business index from Intuit showed a slight increase in small business employment in September.

• Conclusion: The data was mixed. The ADP report was a little lower the consensus, and the ISM surveys suggest slightly less hiring in September than in August. Also consumer sentiment decreased. However weekly claims for the reference week have declined to pre-recession levels.

The employment report will be delayed, but my guess is the report would have been somewhat below expectations.

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