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The US Labor Department September jobs report on Friday is expected to rebound from August's lower than expected 130k v 165,000 NFP jobs added. In August the US added 3,000 manufacturing jobs. Unemployment stayed at 3.7% just off the lowest since December 1969.

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September 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 2.9% in September.

The market expected the September report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 145,000 new jobs. Last month it came in right lower at 130,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was +45,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs Sept 2019


Employment:

  • Non-farm payrolls +136k vs +145K expected, Prior 130K (revised from K)
  • Unemployment rate 3.5% vs 3.7% expected/prior
  • Participation rate 63.2% vs 63.2% expected.prior (63.2% highest since 2014)
  • Underemployment rate 6.9% vs 7.2 % prior
  • Two month net revision +45k vs Prior -20K
  • Manufacturing payrolls -2k vs +36k Prior ( April was first loss since Oct 2016)
  • Private payrolls +114k vs 96K Prior, expected

Wages:

  • Average hourly earnings 0.00% m/m v +0.4%/+0.3% m/m Prior/Expected
  • Average hourly earnings +2.9% y/y vs 3.2% exp, Prior 3.3% y/y
  • Average weekly hours  34.4 v 34.4 exp  Prior 34.3

Image

Chart via @ronh999

Household Survey Data

In September, the unemployment rate declined by 0.2 percentage point to 3.5 percent. The last time the rate was this low was in December 1969, when it also was 3.5 percent. Over the month, the number of unemployed persons decreased by 275,000 to 5.8 million

Among the major worker groups, the unemployment rate for Whites declined to 3.2 percent in September. The jobless rates for adult men (3.2 percent), adult women (3.1 percent), teenagers (12.5 percent), Blacks (5.5 percent), Asians (2.5 percent), and Hispanics (3.9 percent) showed little or no change over the month.

Among the unemployed, the number of job losers and persons who completed temporary jobsdeclined by 304,000 to 2.6 million in September, while the number of new entrants increased by 103,000 to 677,000. New entrants are unemployed persons who never previously worked.

In September, the number of persons unemployed for less than 5 weeks fell by 339,000 to 1.9 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.3 million and accounted for 22.7 percent of the unemployed. 

The labor force participation rate held at 63.2 percent in September. The employment-population ratio, at 61.0 percent, was little changed over the month but was up by 0.6 percentage point over the year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.4 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In September, 1.3 million persons were marginally attached to the labor force, down by 278,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. 

Among the marginally attached, there were 321,000 discouraged workers in September, little changed from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 978,000 persons marginally attached to the labor force in September had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 136,000 in September. Job growth has averaged 161,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. In September, employment continued to trend up in health care and in professional and business services. 

In September, health care added 39,000 jobs, in line with its average monthly gain over the prior 12 months. Ambulatory health care services (+29,000) and hospitals (+8,000) added jobs over the month. Employment in professional and business services continued to trend up in September (+34,000). The industry has added an average of 35,000 jobs per month thus far in 2019, compared with 47,000 jobs per month in 2018.

Employment in government continued on an upward trend in September (+22,000). Federal hiring for the 2020 Census was negligible (+1,000). Government has added 147,000 jobs over the past 12 months, largely in local government. Employment in transportation and warehousing edged up in September (+16,000). Within the industry, job growth occurred in transit and ground passenger transportation (+11,000) and in couriers and messengers (+4,000). Retail tradeemployment changed little in September (-11,000). Within the industry, clothing and clothing accessories stores lost 14,000 jobs, while food and beverage stores added 9,000 jobs. Since reaching a peak in January 2017, retail trade has lost 197,000 jobs.

Employment in other major industries, including mining, construction, manufacturing, wholesale trade, information, financial activities, and leisure and hospitality, showed little change over the month. In September, average hourly earnings for all employees on private nonfarm payrolls, at $28.09, were little changed (-1 cent), after rising by 11 cents in August. Over the past 12 months, average hourly earnings have increased by 2.9 percent.

In September, average hourly earnings of private-sector production and nonsupervisoryemployees rose by 4 cents to $23.65. (See tables B-3 and B-8.) The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in September. In manufacturing, the average workweek and overtime remained at 40.5 hours and 3.2 hours, respectively. The average workweek of private-sector production and nonsupervisory employees held at 33.6 hours. (See tables B-2 and B-7.) The change in total nonfarm payroll employment for July was revised up by 7,000 from +159,000 to +166,000, and the change for August was revised up by 38,000 from +130,000 to +168,000. With these revisions, employment gains in July and August combined were 45,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 157,000 per month over the last 3 months.

The Employment Situation for October is scheduled to be released on Friday, November 1, 2019, at 8:30 a.m. (EDT).

Other US September Employment Component Releases

Weekly initial jobless claims for the week of September 28

  • Initial jobless claims 219K vs 215K estimate The prior week revised to 215K from 213K
  • Jobless claims 4 week average 212.5 K which is unchanged from the previous week
  • Continuing claims for the week of September 21 1651K versus 1654K estimates. The prior week was revised to 1656K from 1650K
  • Continuing claims 4week average 1661.5 K which is lower from last weeks revised 1667.2 5K

The largest increases in initial claims for the week ending September 21 were in Michigan (+4,258), Kansas (+1,475), Missouri (+1,224), Tennessee (+1,191), and Indiana (+796),

The largest decreases were in New York (-1,777), Georgia (-946), South Carolina (-854), New Jersey (-737), and Florida (-571).

US September Challenger, Gary and Christmas Inc Job Cuts

  • Job cuts -24.8% vs 39% prior
  • Layoffs 41.55K vs 54.480K prior

The data provides information on the number of announced corporate layoffs by industry and region and acts as a general labour market indicator. The pace of job cuts slowed in September

ADP Jobs Report

  • 135K job additions vs 140K consensus. Prior 195K (revised to 157K)
  • Service providing +127K
  • Goods producing +8K
  • Natural resources -3K
  • Construction +9K
  • Manufacturing +2K
  • Small business +30K
  • Midsized +39K
  • Large +67K

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August 2019 U.S. Employment Report Recap

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 3.2% in August.

The market expected the August report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of  164,000 new jobs, it came in right lower at 130,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was -20,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs Aug 2018 

Employment:

  • Non-farm payrolls +130k vs +164K expected, Prior 159K (revised from 164K)
  • Unemployment rate 3.7% vs 3.7% expected/prior
  • Participation rate 63.2% vs 63.0% expected.prior (63.2% highest since 2014)
  • Underemployment rate 7.2% vs 7.0 % prior
  • Two month net revision -20k vs Prior -41K
  • Manufacturing payrolls +3k vs +16k Prior ( April was first loss since Oct 2016)
  • Private payrolls +96k vs 148K Prior, expected

Wages:

  • Average hourly earnings +0.4% m/m v +0.2%/+0.3% m/m Prior/Expected
  • Average hourly earnings +3.2% y/y vs 3.2% exp, Prior 3.3% y/y
  • Average weekly hours 34.4 v 34.4 exp  Prior 34.3

 

Source: AFP, Challanger, DOL, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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