Ignore Trump on jobs — 'A real slowdown is coming' even if payrolls crush it, says Pantheon Macroeconomics

Associated PressEconomists are holding their breath on job growth.
  • Pantheon Macroeconomics expects a robust 180,000 jobs were added to the US economy in August.
  • But “a slowdown is coming,” and likely to hit in November, Ian Shepherdson, Chief Economist at Pantheon Macroeconomics, wrote in a note on Friday.
  • Our expectation of sub-100,000 payrolls by late fall suggests the very real possibility that the unemployment rate will start to nudge higher around the turn of the year.”
  • View Markets Insider’s homepage for more stories.

Nonfarm payrolls are due to be released in a few hours on Friday, and Pantheon Macroeconomics expects a robust 180,000 jobs were added to the US economy in August.

But Pantheon warns that the data, even if incredibly positive, obscures deeper problems, and won’t last. Its own surveys “clearly signal much weaker job gains ahead,” the economists say.

That’s because nonfarm payrolls aren’t actually fully reflective of the current economy because hiring often lags other trends.

“A slowdown is coming,” and likely to hit in November, Ian Shepherdson, Chief Economist at Pantheon Macroeconomics, wrote in a note on Friday.

Another jobs measure, Thursday’s ADP report of private companies, showed hiring in August jumped. President Trump tweeted later that day: “Really Good Jobs Numbers!”

“Don’t be deceived” by a strong report, Shepherdson said. “The headline says nothing about the future-it tends to lag movements in core retail sales, which have surged in recent months – but the employment index, when combined with other survey evidence, tends to lead payrolls by about three months. Our composite hiring index now points to sub 100,000 payroll gains by November.”

For Trump, job growth is one of the key signals that the US economy under his presidency has been doing well, as well as a bullish stock market and low unemployment rates.

What makes matters worse for the president is that this lack of growth could impact the unemployment rate.

“The trend rate of growth in the labour force is about 125,000 per month, so our expectation of sub-100,000 payrolls by late fall suggests the very real possibility that the unemployment rate will start to nudge higher around the turn of the year.

Shepherdson did add that he expects unemployment to stay low, but had there been no tariff war with China, any pressure on that rate would have been alleviated.

“The optics of any sustained increase [of unemployment] will put the administration under further pressure to reverse at least some of the China tariffs. Without the trade war, we’d expect payroll growth to remain close to 200,000, pushing unemployment down.

Job Growth AugustPantheon MacroeconomicsJob growth could suffer later in the year.

See More: The US is now the 5th major economy to see manufacturing slump – a sign of how hard Trump’s trade war is hitting global growth.

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