The September jobs report will be more useful as a gauge of output-impairment resulting from the recent hurricanes than as a gauge of underlying economic trends. In this regard, it is more weather report than economic report. The pace of hiring, hours worked and average hourly earnings are all vulnerable, so outlying results will be viewed skeptically by analysts. The Bureau of Labor Statistics has already issued a warning that the data will be affected but is also cautioning that it will not be able to quantify the magnitude of the storm impact.
The consensus among economists polled by Bloomberg anticipates an increase in September nonfarm payrolls of 80k (74k private), well below the underlying trend. (The 6- and 12-month moving averages are 160k and 175k, respectively.) BI Economics estimates that Hurricanes Harvey and Irma cumulatively depressed the pace of hiring by roughly 100k relative to trend, thereby leading to an even weaker-than-consensus estimate in the vicinity of 60k.
It will be challenging to quantify a precise hurricane-impact, but past episodes suggest that it could range anywhere from an increase of 31k to a decline of 199k, relative to trend. BI Economics’ analysis detected a tendency for Gulf hurricanes (like Harvey) to have a more severe impact on hiring. This is not surprising since there is more industrial activity in this region.
The expectations of specialists are varying in wide scopes. Jim O'Sullivan from High Frequency Economics is expecting that the data will be aabove expectations: 125k. Citi, Moody's, Goldman and Oxford economics are forecasting decline in the report. Westpac and USD ate betting on increase of 100k and 125k repectively.
Source: Bloomberg Pro Terminal
Trader Bozhidar Arabadzhiev
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