December Employment Preview

On Friday at 8:30 AM ET, the BLS will release the employment report for December. The consensus is for 158,000 jobs added, and for the unemployment rate to increase to 3.8%.

There were 199,000 jobs added in November, and the unemployment rate was at 3.7%.

From Goldman Sachs:

"We expect an above-consensus 190k increase in payrolls and a below-consensus 3.7% unemployment rate on Friday."

• ADP Report: The ADP employment report showed 164,000 private sector jobs were added in December.  This suggests job gains above consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM services are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased in December to 48.1%, down from 45.8% last month.   This would suggest about 30,000 jobs lost in manufacturing. The ADP report indicated 13,000 manufacturing jobs lost in December.

The ISM® services employment index will be released after the employment report on Friday.

• Unemployment Claims: The weekly claims report showed a smaller number of initial unemployment claims during the reference week (the 3rd through the 9th in December) from 203,000 in November to 235,000 in December.  This suggests fewer layoffs in December compared to November.

•  COVID: As far as the pandemic, the number of patients hospitalized during the reference week in December was around 19,000, up from 13,000 in November.  

• Conclusion: Fewer unemployment claims and favorable weather suggest a positive report in December.   My guess is the headline number will be above the consensus.