September Employment Preview

On Friday at 8:30 AM ET, the BLS will release the employment report for September. The consensus is for 145,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.

There were 142,000 jobs added in August, and the unemployment rate was at 4.2%.

From BofA:

Although the labor market has been soft, low jobless claims suggest that the September employment report should be decent. We forecast a 150k increase in nonfarm payrolls, compared to 142k in August ... We look for the unemployment rate to remain unchanged at 4.2%
emphasis added

From Goldman Sachs:

We estimate nonfarm payrolls rose by 165k in September, above consensus of +150k ... We estimate that the unemployment rate was unchanged on a rounded basis at 4.2%, in line with consensus.

• ADP Report: The ADP employment report showed 143,000 private sector jobs were added in September.  This was above consensus forecasts and 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 indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index decreased to 43.9%, down from 46.0% the previous month.   This would suggest about 50,000 jobs lost in manufacturing. The ADP report indicated 2,000 manufacturing jobs added in September.

The ISM® services employment index decreased to 48.1%, from 50.1%. This would suggest 20,000 jobs added in the service sector. Combined this suggests 30,000 jobs lost in September, far below consensus expectations.  (Note: The ISM surveys have been way off recently)

• Unemployment Claims: The weekly claims report showed fewer initial unemployment claims during the reference week at 222,000 in September compared to 233,000 in August.  This suggests fewer layoffs in September compared to August.

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