by Calculated Risk on 9/05/2024 03:47:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for August. The consensus is for 164,000 jobs added, and for the unemployment rate to decreased to 4.2%.

There were 114,000 jobs added in July, and the unemployment rate was at 4.3%.

From Goldman Sachs:

We are below consensus on payroll growth at 155k but in line on the unemployment rate at 4.2%.

We are below consensus on payroll growth because August payrolls have exhibited a consistent negative bias in initial prints over the last decade, Big Data indicators continued to slow, and the immigration boost to labor force and employment growth should be slowing (although still well above trend). On the positive side, we should see some rebound from severe weather in July.

We expect the unemployment rate fell 0.1pp on a rounded basis to 4.2%, a low hurdle from an unrounded 4.25% in July, reflecting the reversal of some of the temporary layoffs in July linked to summer auto plant retooling shutdowns or extreme heat.
emphasis added

• ADP Report: The ADP employment report showed 99,000 private sector jobs were added in August.  This was below consensus forecasts and 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 indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to 46.0%, up from 43.4% the previous month.   This would suggest about 40,000 jobs lost in manufacturing. The ADP report indicated 8,000 manufacturing jobs lost in August.

The ISM® services employment index decreased to 50.2%, from 51.1%. This would suggest 80,000 jobs added in the service sector. Combined this suggests 40,000 jobs added in August, far below consensus expectations.

• Unemployment Claims: The weekly claims report showed fewer initial unemployment claims during the reference week at 233,000 in July compared to 245,000 in July.  This suggests fewer layoffs in August compared to July.

• Conclusion: My guess is employment gains will be below consensus expectations.