Thursday, December 01, 2016

November Employment Preview

by Bill McBride on 12/01/2016 07:05:00 PM

Friday:
• At 8:30 AM ET, Employment Report for November. The consensus is for an increase of 170,000 non-farm payroll jobs added in November, up from the 161,000 non-farm payroll jobs added in October. The consensus is for the unemployment rate to be unchanged at 4.9%.

Earlier I posted an employment preview from Goldman Sachs.

Here is a summary of recent data:

• The ADP employment report showed an increase of 216,000 private sector payroll jobs in November. This was well above expectations of 160,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth above expectations.

• The ISM manufacturing employment index decreased in November to 52.3%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll decreased about 7,000 in November. The ADP report indicated 10,000 manufacturing jobs lost in November.

The ISM non-manufacturing employment index will not be released until next week.

Initial weekly unemployment claims averaged 251,000 in November, down from 258,000 in October. For the BLS reference week (includes the 12th of the month), initial claims were at 233,000, down from 252,000 during the reference week in October.

The decrease during the reference suggests less labor stress in November than in October.  This is positive for the employment report.

• The final November University of Michigan consumer sentiment index increased to 93.8 from the October reading of 87.2. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and possibly politics.

• Conclusion: Unfortunately none of the indicators alone is very good at predicting the initial BLS employment report. The ADP report and weekly claims suggest stronger job growth. There also might be a little bounce back from Hurricane related weakness in October.

My guess is the November report will be above the consensus forecast.