by Calculated Risk on 10/03/2019 10:50:00 AM

Special Note on Decennial Census: Temporary Decennial Census hiring will probably impact the September employment report with the Census hiring around 15,000 temporary workers. The headline number should be adjusted for these hires, see: How to Report the Monthly Employment Number excluding Temporary Census Hiring

On Friday at 8:30 AM ET, the BLS will release the employment report for September. The consensus is for an increase of 145,000 non-farm payroll jobs in September, and for the unemployment rate to be unchanged at 3.7%.

Last month, the BLS reported 130,000 jobs added in August (including 25,000 temporary Census hires).

Here is a summary of recent data:

• The ADP employment report showed an increase of 135,000 private sector payroll jobs in September. This was below consensus expectations of 152,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth below expectations.

• The ISM manufacturing employment index decreased in September to 46.3%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll decreased 40,000 in September. The ADP report indicated manufacturing jobs increased 2,000 in September.

The ISM non-manufacturing employment index decreased in September to 50.4%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll increased 84,000 in September.

Combined, the ISM surveys suggest employment gains at 44,000 suggesting gains well below consensus expectations.

• Initial weekly unemployment claims averaged 213,000 in September, down from 216,000 in August. For the BLS reference week (includes the 12th of the month), initial claims were at 210,000, down from 211,000 during the reference week the previous month.

This suggest employment growth close to expectations.

• The final September University of Michigan consumer sentiment index increased to 93.2 from the August reading of 89.8. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• The BofA job tracker was weak in August suggesting 123K jobs added in September.

• Conclusion: The ISM employment indexes were especially weak in September, as was the ADP employment report.  Also the BofA jobs tracker was weak in September, although consumer sentiment rebound slightly and unemployment claims during the reference week were low.

My guess is the jobs number (ex-Census hiring) will be below expectations.