Deutsche Bank see Q4 GDP in the U.S. surging to 3.3%, and in order to get there, bank analysts think we need to see a lot more hiring.
From Deutsche Bank (emphasis ours):
As we highlight in the following figure, the productivity trend appears to be mean-reverting. Third quarter productivity slowed to 2.5% y/y from 3.7% in Q2 and 6.3% in Q1. Hence, as long as this trend continues, additional output gains will require a larger labour input. In other words, while the economy achieved 2% growth in Q3 based on private sector hiring of roughly 90k per month, to achieve a similar percentage increase in Q4 output private hiring would need to rise at a substantially faster rate.
We are eventually going to see this growth leak into jobs, but it is unknown whether it will be in tomorrow’s jobs number, according to Deutsche Bank.
Conversely, one has to wonder if tomorrow’s jobs report could be an early indicator of Q4 GDP. If we don’t see hiring pickup, than perhaps growth will be lower than Deutsche Bank’s projection.
Their projection: +80K on non-farm payrolls, and a 0.1% decline in the unemployment rate to 9.5%.
Photo: Deutsche Bank