The Daily Dish

September 5th Edition

Later this morning the August employment numbers will be released. July saw a slight uptick in unemployment to 6.2 percent, and 209,000 jobs added. August numbers will be looking to brush off the July vacation that went over about as well as flat soda. As a refresher, here is a recap of key economic indicators since last month’s report:

  • The price index of U.S. imports decreased 0.2 percent in July;
  • The Producer Price Index for final demand rose 0.1 percent in July;
  • The Consumer Price Index increased 0.1 percent in July;
  • Real average hourly earnings were unchanged from June to July;
  • Orders for durable goods increased 22.6 percent;
  • Consumer Confidence index stands at 92.4;
  • New home sales decreased 2.3 percent in July;
  • ISM gauge of non-manufactured goods rose to 59.6 percent;
  • ISM manufacturing index rose to 59.0 percent;
  • ADP reported private-sector employment up by 204,000 jobs in August.

Eakinomics: August Jobs

What will the Department of Labor Employment Report for August reveal at 8:30?  Recall that in July, non-farm employment rose 209,000 jobs, while the unemployment rate settled at 6.2 percent. That marked the 6th straight 200,000+ jobs month this year (see table, line 1). To get a feel for the month-to-month momentum in the labor market it is useful to take a look at recent readings on the economy, namely the ADP Employment Report, the Institute for Supply Management reports on manufacturing and non-manufacturing (focusing on the employment index), and new claims for unemployment insurance (specifically, the 4-week moving average value in the last week of the month). 

Each of these indicators provides a direct read on the status of the labor market, and are conveniently available for August prior to the release of the jobs report by the Bureau of Labor statistics. The table provides a quick summary of 2014 to date. As the data reveal, non-manufacturing employment grew stronger in August, while the remainder of the indicators remained solid and essentially unchanged.

 

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

BLS Jobs

 144,000

 222,000

 203,000

 304,000

 229,000

 298,000

 209,000

 

ADP Jobs

 121,198

 193,106

 198,110

 204,992

 213,542

 297,139

 212,429

 204,337

ISM Mfg

52.3

52.3

51.1

54.7

52.8

52.8

58.2

58.1

ISM Non-Mfg

56.4

47.5

53.6

51.3

52.4

54.4

56.0

57.1

New UI Claims

 335,250

 338,000

 321,000

 320,250

 310,500

 315,250

 297,500

 302,750

 

In light of this, I’d expect jobs in August to be up some from July — my prediction is 225,000 jobs — with some risk of a larger number yet. As for unemployment, the key remains the degree to which the recession-weary return to the labor force. There appears to be some firming on this front, so I expect the unemployment rate to remain unchanged at 6.2 percent.

For my take on the whole report, look for the U-6 Fix later this morning.

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