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 labour 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 labour force participation. Average hourly earnings are likely to continue to increase at a trend 0.2% mum 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.
Payroll growth surprised to the downside in August. However, incoming labour market indicators released since the last jobs report have been generally more favourable 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 labour 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.
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