Thursday, October 01, 2020

September Employment Preview

by Calculated Risk on 10/01/2020 09:00:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for September. The consensus is for 850 thousand jobs added, and for the unemployment rate to decrease to 8.2%.

The decennial Census will subtract 41,400 temporary jobs. Also, due to the delays in school openings, it is likely the education will show a solid decline since many schools are online (support staff will probably be lower than usual).

The ADP employment report showed a gain of 749,000 private sector jobs, above the consensus estimate of 605 thousand jobs.  The ADP report hasn't been very useful in predicting the BLS report, but this suggests the BLS report could be weaker than expected.

The ISM manufacturing employment index increased in September to 49.6% from, 46.3% in August. This would suggest few manufacturing jobs added in September - although ADP showed 130,000 manufacturing jobs added!

The weekly claims report showed a high number total continuing unemployment claims during the reference week, although this might not be very useful right now.

There are other indicators that analysts are looking at - like Homebase hours worked and Kronos (see Ernie Tedeschi comments).

Homebase data has flatlined in recent weeks. Pairing their data with UI claims yields a forecast of +290K jobs in September, not seasonally adjusted.

Kronos meanwhile has accelerated. Using them instead leads to a +2.4 million forecast.
Goldman Sachs forecasts:
We estimate nonfarm payrolls rose 1.1mn in September ... We estimate the unemployment rate declined by three tenths to 8.1%.
And Merrill Lynch forecasts: "We expect nonfarm payroll growth of 800k in September and the unemployment rate to improve to 8.1% from 8.4%."

• Conclusion: There is a wide range of estimates for the September report. The employment related data has been all over the place. My guess is the report will be lower than the consensus.