Nov 01, 2013

In Lieu of the Jobs Report…

Like many other analysts and researchers, the staff of TrendLine relies heavily on the monthly economic data from the Bureau of Labor Statistics (BLS) to derive our forecasts for contingent worker supply and demand. Due to the government shutdown, the Labor Department did not release its September employment report. With the government now reopen, it is still unclear when and whether the Labor Department will release data on jobs and inflations for the month of September. Similarly, due to the length of time that BLS workers were off the job (and not collecting information), it is unsure if the data reported for the month of October will be skewed.

During the shutdown, a secondary source of economic data, the Bureau of Economic Analysis (BEA), which publishes the information on GDP and personal income, was also closed.

“At this moment, we are flying blind.” ~Alan Greenspan, former chairman of the Federal Reserve

In lieu of the BLS jobs report, TrendLine analysts examined other sources of data to provide you with some key figures on employment.

What was expected?

The BLS report was expected to show that the economy added 180,000 jobs in September. The employment rate was predicted to remain stable at 7.3 percent. The Producer Price Index (PPI) was expected to increase by 0.2 percent in September. Estimations were that the Consumer Price Index (CPI) also increased by 0.2 percent. Economists believe that average hourly earnings in September increased 0.3% month-over month, and 7.3 percent year-over-year.

Experts believe that the U.S. economy continued to generate jobs in September at a pace somewhere between 150,000 and 200,000. HIS Global Insight, a forecasting firm, said that “September employment growth, once the report is released, will come in at 150,000.”

ADP Employment Report

The ADP Employment Report is sponsored by ADP and shows changes in private sector employment. It does not factor in government or public jobs. For September 2013, the ADP report showed a gain of 166,000 private sector jobs. The report shows that the United States gained many low-paying jobs. The service sector had the most gains, with 147,000 private sector jobs. The goods sector gained 19,000 jobs and professional/business services grew by 27,000 jobs. Within the goods sector, construction had the most growth with 16,000 jobs added while manufacturing gained only 1,000 jobs.

"The ADP report has improved significantly as a forecasting input for private payrolls over the past year. Therefore, in the event of the employment report is delayed, we will be comfortable relying on the ADP series as a close proxy of September hiring” ~Joe LaVorgna, chief U.S. Economist at Deutsche Bank.

Unemployment Insurance Weekly Claims Report

The Employment and Training Administration (ETA), part of the Department of Labor, issued a press release on October 3rd, 2013, indicating that the four-week moving average on new claims for unemployment insurance hit a six year low of 305,000 for the week ending September 28th, 2013.

Challenger, Gray & Christmas, Inc. Planned Layoff Report

The outplacement firm said that companies announced plans for 40,289 layoffs in September. This is 20 percent less than August 2013. The industries with the most job cuts were computer, industrial goods, health care, and insurance. The states with most layoffs include New York, Illinois, Ohio, California, Texas, Oklahoma and Mississippi.

ISM Indexes

The ISM service employment sub-index fell to 52.7 in September from 57 in August. This suggests that service jobs are growing but at a slowing pace. The ISM manufacturing employment sub-index increased to 55.4 in September from 53.3 in August. This suggests that manufacturing jobs are growing at an increased pace.

“The jobs report is a flashlight into the dense forest of economic information. We’ve turned the flashlight off.” ~Diane Swonk, Chief Economist at Mesirow Financial.