Good morning friend,
In August American employers added 1.371 million new workers to payrolls,
with private sector payrolls picking up just over 1 million new
employees. The private sector gains were largely concentrated in service
jobs, which saw 984,000 employees gained. Overall government gained
344,000 jobs, of which 238,000 were added to federal job rolls due to
temporary hiring for the 2020 Census. Combined, over the last 4 months
payrolls have recovered about 48 percent of the jobs lost in March and
April. The unemployment (U-3) rate fell to 8.4 percent, while the labor
force participation rate increased to 61.7 percent on the strength of
nearly 1 million new entrants to the U.S. labor force. Since May, 4.3
million Americans have entered the labor force, just over half of the
roughly 8 million lost in March and April. The unemployment rate dropped
for all education levels as well as all races. Average hourly earnings
increased by 11 cents, marking a 4.65 percent yearly gain, while
production and nonsupervisory workers gained 18 cents per hour for a 4.96
percent yearly gain. Both figures remain substantially elevated due to
the compositional changes in the measured workforce.
Here is a brief summary of the major economic indicators since the last
jobs numbers:
- The Producer Price Index
for final demand increased 0.3 percent in August;
- The Consumer Price Index
increased 0.4 percent in August;
- Real average hourly
earnings were unchanged from July to August;
- Orders for durable goods
(including defense and aircraft) increased 5.6 percent in August;
- New home sales increased
4.8 percent in August;
- The Price Index of U.S.
imports increased 0.9 percent in August;
- ISM Non-Manufacturing
Index decreased 1.2 percentage points to 56.9 percent in August;
- ISM Manufacturing
decreased 0.6 percentage points to 55.4 percent in August;
- Consumer Confidence Index
increased from 86.3 to 101.8 in September;
- ADP reported private
sector employment increased by 749,000 jobs in September.
Authored by Gordon Gray, AAF’s
Director of Fiscal Policy
Evidently there is an election this year. While not the last jobs report
before the election, it is likely the last jobs report that will have a
significant effect on the contest, with the November release date falling
just four days before election day. This report may also have an outsized
affect on last-ditch (as of this writing) congressional negotiations on
an additional fiscal relief package. Accordingly, all eyes are on this
jobs number right when a downside surprise may be most consequential.
The major indicators do not presage a bad beat on the jobs numbers. For
the week including September 12th, there were 866,000 initial
unemployment claims, which is down by 238,000 from the preceding month.
The contemporaneous indicators would suggest a jobs print at least
similar to those seen in the prior two months. Consumer Confidence in September,
as measured by the Conference Board, rebounded in the largest improvement
in the index since 2003, seemingly shrugging off the falloff in fiscal
support. Another index, the University of Michigan’s survey of consumer
sentiment, was also up over August levels, though only modestly.
ADP reported the largest increase in private payrolls since June,
estimating that 749,000 workers were added to U.S. firm payrolls last
month. Since June, ADP’s initial estimate has underestimated monthly
payroll gains by an average of 1.6 million over the previous three
months. It is important to note that this mismatch does not impugn the
data in any way, but rather 1) underscores the extraordinary magnitude of
the labor flows seen over the last several months and 2) is potentially
instructive in considering whether the jobs numbers are poised for a
major swing. The picture that the ADP data are painting is at least very
suggestive that today’s jobs print will not show major weakening in the
labor market.
The United States has not seen a major course change in the direction of
the pandemic, one way or another. Regionally, there has been tremendous
variation, and major sectors of the economy remain severely impaired. To
be sure, flu season and the effects that cold weather may have on a
struggling hospitality industry are significant risks heading into the
fall and winter, but they will not animate the September jobs number.
In short, the data are not pointing to a jobs number – a decline, for
example – that will alter the course of the nation’s politics. But this
is 2020: Nothing about a global pandemic, amid any number of other
challenges to the nation’s economy, should give analysts much confidence
in asserting the coast is clear even narrowly with respect to a single new
indicator. While households and firms have been able to weather this
storm with remarkable steadfastness – buoyed by unprecedented fiscal
intervention – those policies are running out and were never going to be
an enduring substitute for real economic activity. That handoff was
always going to be fraught. Doing so without additional fiscal support in
place may succeed – it is simply riskier to do so. And those risks are
bearing out in places, with some major employers announcing new mass
layoffs. Anecdotally, some businesses that held on during the worst of
the pandemic are simply running out of time.
There are significant risks to the labor market in the coming months, and
the economy is far from strong, but the balance of the major indicators
suggests a healthy gain in employment in September. This guesstimator is
expecting a 1.1 million jobs gain, bringing unemployment down to 7.7
percent. Earnings continue to reconstitute as workers return – for this
month, I’m assuming earnings to be flat.
|
No comments:
Post a Comment