RSS Feed by Calculated Risk on 1/09/2025 08:55:00 AM
Thursday, January 09, 2025
December Employment Preview
On Friday at 8:30 AM ET, the BLS will release the employment report for December. The consensus is for 160,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.
There were 227,000 jobs added in November, and the unemployment rate was at 4.2%.
From Goldman Sachs:
• 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 was at 45.3%, down from 48.1%. This would suggest about 45,000 jobs lost in manufacturing. The ADP report indicated 11,000 manufacturing jobs lost in December.
The ISM® services employment index decreased to 51.4% from 51.5%. This would suggest 110,000 jobs added in the service sector. Combined this suggests 65,000 jobs added, far below consensus expectations. (Note: The ISM surveys have been way off recently)
• Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 220,000 in December compared to 215,000 in November. This suggests slightly more layoffs in December compared to November.
We expect a below-consensus 125k increase in payrolls (vs. +160k consensus) in December. We are below consensus because 1) Big Data indicators point to slower job growth in December and 2) we estimate that an unfavorable calendar configuration could be a 50k drag. ... We forecast that the unemployment rate edged up to 4.3%.From BofA:
emphasis added
We expect nonfarm payrolls to rise by 175k in Dec after coming in at 227k in Nov (Exhibit 1). This above-consensus (160k) forecast is driven by initial jobless claims remaining extremely low in Dec. In terms of the HH survey, we expect some payback in Dec for two consecutive months of weak employment. This should keep the u-rate at 4.2%.• ADP Report: The ADP employment report showed 122,000 private sector jobs were added in December. 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 decreased to was at 45.3%, down from 48.1%. This would suggest about 45,000 jobs lost in manufacturing. The ADP report indicated 11,000 manufacturing jobs lost in December.
The ISM® services employment index decreased to 51.4% from 51.5%. This would suggest 110,000 jobs added in the service sector. Combined this suggests 65,000 jobs added, far below consensus expectations. (Note: The ISM surveys have been way off recently)
• Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 220,000 in December compared to 215,000 in November. This suggests slightly more layoffs in December compared to November.
• Conclusion: Employment was impacted by strikes and hurricanes in October (+36K job added) and then boosted in November (+227K jobs added) as the strikes ended. In the six months prior to October, employment gains averaged 150 thousand per month - and that is probably the current trend. My guess is employment will be below consensus in December.
