Friday, September 5, 2014

Aug '14 employment numbers disappoint ...

While we estimated a big 35K miss as compared with the consensus, the miss was even bigger, 88K.  August NFP change of 142K came in significantly below the 230K consensus and our 195K estimate.   

There was weakness in manufacturing and retail, which we touched on yesterday.  Temp help services increased nicely, but that could also be bad news as it may indicate uncertainty continuing to cloud employers' decisions.  Leisure and hospitality came in higher than we expected, but we think a slowdown in hiring will be seen in that industry during the next few months.  And government sector jobs grew in August compared to a decline in July.

Hourly wages grew 2.1% Y/Y, about 10bps higher than the last headline CPI (Jul. '14), but we'll see how it compares with August CPI.  While higher wage growth than CPI is good news, we note it could also indicate continuing increase in cost per employee.  With the economy still growing at a moderate rate, a higher cost per employee is not necessarily good news for job growth. 

The 'official' unemployment rate went down 10bps to 6.1%, while the U-6 rate declined 20bps to 12.0%, slightly discounting the 0.1% decline in participation rate.  Number of people employed part-time for economic reasons continued to decline, but the ones that could only find part-time work went up, unlike what we saw the last two months. 

Given the continuing increase in online wanted ads, it is likely September will not be as disappointing, something we touched on yesterday and Yahoo!Finance had a story on this morning

Enjoy the weekend ... and J-E-T-S, Jets, Jets, Jets, as the 2014 NFL season began last night!

Thursday, September 4, 2014

August '14 NFP change guesstimate ...

Although we are a bit late this time, we thought to provide our guesstimate for tomorrow's BLS employment report.  We estimate BLS will report a net change in NFP of +195K for August, below the 230K consensus.  While ISM services employment sub-index was encouraging, we think it will be offset by slower growth in retail, and leisure and hospitality jobs.  Although it is back-to-school season, we think disappointing retail numbers overall have likely forced many to take it easy on the hiring, at least in the beginning.  And don't forget that as number of retail stores decline (due to continuing growth of ecommerce), so does the headcount.  We also saw slowdown in job growth on the manufacturing side, based on regional surveys and ISM manufacturing.  Regarding online indicators, total online job postings, in addition to new ones in August, did increase at the highest rate since June, which may be positive for September and Fall '14.