by Calculated Risk on 9/26/2014 12:05:00 PM

The September employment report will be released next Friday, October 3rd, and the consensus is that 200 thousand payroll jobs were added in September and the unemployment rate was unchanged at 6.1%.

Here are two forecasts:

From Merrill Lynch:

The September employment report is likely to reveal solid job growth of 235,000 with possible upward revisions to prior months. Job growth was disappointing in August, only increasing 142,000, notably below the recent trend. There has been a pattern of upward revisions to the jobs report in August, averaging about 30,000. Our forecast for September combined with likely positive revisions should keep the 3-month moving average for payrolls above 200,000. Among the components, we think government jobs will be up 10,000 while private payrolls expand 225,000. We forecast a strong gain in manufacturing jobs, reflecting healthy improvement in the survey data. Job growth in the retail sector should also be solid after a decline in August. The continued modest improvement in housing construction should continue to support hiring in the sector.

We forecast the unemployment rate to hold steady at 6.1% in September. The labor force participation rate fell in August while household jobs were particularly soft. We do not expect the same for September, although there is a great deal of uncertainty in the monthly forecasts of labor force participation. Average hourly earnings are likely to continue to increase at a trend 0.2% mom rate, which will push the yoy rate up to 2.2%. While this is a pickup from the annual pace in August, it is within the recent range for growth in average hourly earnings.
emphasis added

From Nomura:

Payroll growth surprised to the downside in August. However, incoming labor market indicators released since the last jobs report have been generally more favorable for payroll growth. Initial jobless and continuing claims are still near pre-recession levels. In addition, regional manufacturing surveys released thus far in September suggest that manufacturing employment continued to increase.

Based on these labor market readings in September, we forecast a 200k increase in private payrolls, with a 10k increase in government jobs, implying that total nonfarm payrolls will gain 210k. Furthermore, given the solid momentum implied by regional manufacturing surveys, we expect manufacturing employment to grow by 15k. We forecast that average hourly earnings for private employees rose by 0.25% again in September, supporting our forecast of a gradual pick-up in wage inflation. Lastly, based on the improvement in continuing jobless claims, we expect the household survey to show that the unemployment rate fell 0.1pp to 6.0%.

CR Note: In August, a strike at Market Basket in New England negatively impacted the employment report. From BLS Commissioner Erica Groshen:

Within retail, employment declined in food and beverage stores (-17,000); this industry was impacted by employment disruptions at a grocery store chain in New England.

The disruption ended quickly, and food and beverage employment should bounce back in September.

by Calculated Risk on 9/26/2014 09:55:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for September was at 84.6, unchanged from the preliminary reading of 84.6, and up from 82.5 in August.

This was at the consensus forecast of 84.6. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011.

by Calculated Risk on 9/26/2014 08:36:00 AM

From the BEA: Gross Domestic Product: Second Quarter 2014 (Third Estimate)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.6 percent in the second quarter of 2014, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 4.2 percent. With the third estimate for the second quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in exports were larger than previously estimated ...

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Real GDP increased 4.6 percent in the second quarter, after decreasing 2.1 percent in the first. This upturn in the percent change in real GDP primarily reflected upturns in exports and in private inventory investment, accelerations in nonresidential fixed investment and in PCE, and upturns in state and local government spending and in residential fixed investment that were partly offset by an acceleration in imports.

Here is a Comparison of Third and Second Estimates.

by Calculated Risk on 9/25/2014 08:55:00 PM

From Merrill Lynch:

We look for 2Q GDP growth to be revised up yet again, likely by another 0.6pp bringing GDP growth to 4.8% qoq saar. Revisions to construction data suggest greater investment in nonresidential structures and slightly more residential construction. We also expect the trade data to be adjusted to show a narrower deficit. Inventories should also be revised lower, perhaps adding 1.3pp to growth versus the prior estimate of 1.7pp. Spending on consumer services will also likely be revised, but there is uncertainty on the magnitude.

Friday:
• At 8:30 AM ET, Gross Domestic Product, 2nd quarter 2014 (third estimate). The consensus is that real GDP increased 4.6% annualized in Q2, up from 4.2% in the second estimate.

• At 9:55 AM, Reuter's/University of Michigan's Consumer sentiment index (final for September). The consensus is for a reading of 84.6, unchanged from the preliminary reading of 84.6, and up from the August reading of 82.5.

by Calculated Risk on 9/25/2014 05:52:00 PM

From housing economist Tom Lawler:

ACS: Sharp Slowdown in Household Growth in 2013 Mainly Attributable to Fewer Folks Living Alone, Big Increases in “Doubling (and more) Up”

As I noted last week, ACS for 2013 suggested that there was a sharp slowdown in the growth of the number of households in 2013.

That sharp slowdown was not because of slower population growth, but instead was attributable to a significant jump in the average household size – though that in and of itself is not insightful, since if the growth rate in households is below the growth rate in the household population, ...

While I hope to send out a write up tomorrow, the table below I believe provides some significant insights into the jump in average household size/slowdown in household growth.

 The table compares changes in household populations and households for various households/relationships from 2012 to 2013 with annual average changes from 2010 to 2012. Certain really significant differences are in bold type.

Households and Household Populations by Various Types, ACS
				Annual Change
	2013	2012	2010	2012-2013	2010-2012 (Average)
Population in Households	308,099,169	305,885,362	301,362,366	2,213,807	2,261,498
Households	116,291,033	115,969,540	114,567,419	321,493	701,061
Average Household Size	2.649	2.638	2.630	0.012	0.004
Population in Family Households	256,991,641	255,379,222	252,364,729	1,612,419	1,507,247
Family Households	76,680,463	76,509,262	76,089,045	171,201	210,109
One-Person Households	32,242,369	32,256,217	31,403,342	-13,848	426,438
Population in 2+ Non-Family Households	18,865,159	18,249,923	17,594,295	615,236	327,814
2+ Non-Family Households	7,368,201	7,204,061	7,075,032	164,140	64,515
Population in Family Households	256,991,641	255,379,222	252,364,729	1,612,419	1,507,247
Householder, Spouse, Child	226,742,233	226,165,010	223,905,638	577,223	1,129,686
Other Relative (including In-Laws)	22,938,742	22,275,332	21,610,953	663,410	332,190
Nonrelatives	7,310,666	6,938,880	6,848,138	371,786	45,371
Population in 2+ Non-Family Households	18,865,159	18,249,923	615,236	615,236	8,817,344
Householder	7,368,201	7,204,061	7,075,032	164,140	64,515
Unmarried Partner	3,952,380	3,909,449	3,809,564	42,931	49,943
Other	11,447,016	11,045,862	10,519,263	401,154	263,300
Average Household Size, 2+ Non-Family Household	2.560	2.533	2.487	0.027	0.023
Roomer or boarder	1,694,477	1,567,268	1,595,106	127,209	-13,919
In Family Household	673,210	612,741	671,299	60,469	-29,279
In Non-Family Household	1,021,267	954,527	923,807	66,740	15,360
Housemate or Roommate	5,978,352	5,793,412	5,587,176	184,940	103,118
In Family Household	1,206,366	1,189,913	1,180,670	16,453	4,622
In Non-Family Household	4,771,986	4,603,499	4,406,506	168,487	98,497
Other non-partner/non-foster child Non-relative	3,813,499	3,435,254	3,129,423	378,245	152,916
In Family Household	2,097,727	1,895,833	1,796,638	201,894	49,598
In Non-Family Household	1,715,772	1,539,421	1,332,785	176,351	103,318