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September Employment Preview


On Friday at 8:30 AM ET, the BLS will release the employment report for September. The consensus is for 150,000 jobs added, and for the unemployment rate to decrease to 3.7%.

There were 187,000 jobs added in August, and the unemployment rate was at 3.8%.
From BofA economists:”We look for nonfarm payroll employment to increase by 185k … we forecast the unemployment rate to fall two-tenths in September to 3.6% owing in part to a tenth decline in the labor force participation rate to 62.7%.”From Goldman Sachs: “We estimate nonfarm payrolls rose by 200k in September (mom sa) … Big Data indicators indicate strong job growth on net, and we place little weight on the ADP miss because of its lop-sided composition and because of the negative correlation between that indicator and nonfarm payroll growth. … We estimate that the unemployment rate declined one tenth to 3.7%.”• ADP Report: The ADP employment report showed 89,000 private sector jobs were added in September.  This suggests job gains below consensus expectations, however, in general, ADP hasn’t been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM services are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased in September to 51.2%, up from 48.5% last month.   This would suggest about 10,000 job lost in manufacturing. The ADP report indicated 12,000 manufacturing jobs lost in September.

The ISM® services employment index decreased to 53.4%, down from 54.7%.   This would suggest about 165,000 jobs added in the service sector. Combined this suggests job gains of 155,000 in September, close to consensus expectations.

• Unemployment Claims: The weekly claims report showed a sharp decrease in the number of initial unemployment claims during the reference week (includes the 12th of the month) from 240,000 in August to 202,000 in September.  This suggests fewer layoffs in September than in August.

•  COVID: As far as the pandemic, the number of patients hospitalized during the reference week in September was around 16,000, up from 9,000 in August.  
• Conclusion: Most of the key indicators suggest another solid employment report in September (the ADP report suggests some weakness).  The UAW strike didn’t impact September employment but will likely impact employment in October.   We’ve seen an upside surprise in employment almost every month, however someday we will see a downside surprise.  

Moody’s: “Apartment Market Softens, Office Evolution Continues, and Retail On Shaky Ground”

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