Via Calculated Risk:
On Friday at 8:30 AM ET, the BLS will release the employment report for October. The consensus is for 600 thousand jobs added, and for the unemployment rate to decrease to 7.6%.
• Decennial Census: The decennial Census will subtract 147,311 temporary jobs.
• ADP Report: The ADP employment report showed a gain of 365,000 private sector jobs, well below the consensus estimate of 650 thousand jobs. The ADP report hasn’t been very useful in predicting the BLS report, but this suggests the BLS report could be weaker than expected.
• ISM Surveys: The ISM manufacturing employment index increased in October to 53.2% from 49.6% in September, and is finally above 50. This would suggest essentially no change in manufacturing jobs in October – although ADP showed 7,000 manufacturing jobs added.
The ISM Services employment index decreased in October to 50.1% from 51.8% in October, and is just above 50. This would suggest around 75,000 service jobs added in October. Combined, the ISM surveys suggest around 75,000 private sector jobs added in October. The ISM surveys haven’t been as useful as usual during the pandemic, but this does suggest the report could be weaker than expected.
• Unemployment Claims: The weekly claims report showed a high number of total continuing unemployment claims during the reference week, although this might not be very useful right now. If we did a “Rip Van Winkle”, and saw the weekly claims report this morning, we’d think the economy was in a deep recession!
• Homebase, Kronos/UKG: There are other indicators that analysts are looking at – like Homebase hours worked and Kronos (see Ernie Tedeschi comments).
In 2019, retailers hired 161,000 seasonal employees (NSA) in October. This translated to a gain of 22,000 SA. Brick and Mortar retailers could be more cautious this year, and retail might decline SA in October.There could even be a larger impact in November. In 2019, retailers hired 432,000 temporary employees NSA in November, and this translated to a loss of 14,000 jobs SA. This will be something to watch.• Permanent Job Losers: Something to watch in the employment report will be “Permanent job losers”. While there has been a strong bounce back in total employment, from the shutdown in March and April, permanent job losers have continued to increase.
This graph shows permanent job losers as a percent of the pre-recession peak in employment through the September report.
This data is only available back to 1994, so there is only data for three recessions. In September, the number of permanent job losers increased to 3.756 million from 3.411 million in August.
• Merrill Lynch forecast: “The October jobs report will likely reveal a moderation in nonfarm payroll growth to 625k, down from 661k in September. Census workers will contribute a notable drag – excluding government, we expect solid private payroll growth of 800k. The unemployment rate will likely improve to 7.6% from 7.9% in September.”
• Conclusion: The employment related data has been all over the place, but most of the indicators suggest a weaker report in October than in September. My guess is the report will be lower than the consensus.