A Weak Unemployment Report Tomorrow?

Financial FAQs

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ADP

There could be a sharp drop in new job creation in tomorrow’s Labor Department unemployment report. Why? The GM strike could have shaved as much as 65,000 jobs from the report due to layoffs over the past month, reports the ADP guesstimate of private payroll growth for October.

ADP (Associated Data Processing, a private payroll provider) estimates that private payroll growth in Friday’s employment report for October will rise 125,000. Less manufacturing, and the risk that the GM strike may sharply lower payrolls, ADP estimates payrolls will fall but not too sharply, down 4,000.

The goods-producing sector (manufacturing, construction, and manufacturing) could lose -13,000 jobs, and the service-providing sector add +138,000 jobs. But payrolls could rebound sharply in November, as GM workers and parts subsidiaries return to work, says ICAP.

Reuters/ICAP reports “The GM strike will have a noticeable impact on the payroll data this month.  We have assumed that the strike will reduce manufacturing payrolls by 65K, of which 50K would be from GM itself and 15K from auto suppliers…That would lower our forecast for overall nonfarm payrolls this month to 70K, but the impact would only be temporary.  We expect a strong snapback in November that could push overall payroll growth to something approaching 200K.”

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BEA.gov

The BEA’s Personal Income and Outlays report also showed a slight slowing in consumer spending, per the above graph. Real Disposable Income (blue bar) was 50 percent higher than spending (brown bar), which meant consumers were saving more, spending less due to the economic uncertainty in several sectors—e.g., manufacturing, foreign trade and tariffs, potential budget cutbacks in Medicare and Medicaid, and general uncertainty that no more than 10 percent of American workers have benefited from the longest recovery cycle in U.S. history.

All this is to prepare US for a downer of an unemployment report tomorrow. Will there be just 70,000 non-farm payroll jobs created, and the unemployment rate rise from its very low 3.5 percent? Will this put a further dent in consumer spending and confidence?

Let us hope the holidays provide some cheer!

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

About populareconomicsblog

Harlan Green is editor/publisher of PopularEconomics.com, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
This entry was posted in Consumers, Economy, Keynesian economics, Weekly Financial News and tagged , , , . Bookmark the permalink.

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