Time to start setting our clocks for 8:30 AM ET on Friday. That’s when the BLS will release the penultimate jobs report prior to the vote in November. We’re at T-minus 47:49 hours and counting, which means we have the first of the job-creation indicators from payroll giant ADP. Their monthly analysis of private-sector jobs growth puts expansion at a tepid 162,000:
Employment in the U.S. nonfarm private business sector increased by 162,000 from August to September, on a seasonally adjusted basis. The estimated gains in previous months were revised lower: The July increase was reduced by 17,000 to an increase of 156,000, while the August increase was reduced by 12,000 to an increase of 189,000.
Employment in the private, service-providing sector expanded 144,000 in September, down from 175,000 in August. Employment in the private, goods-producing sector added 18,000 jobs in September. Manufacturing employment rose 4,000, while construction employment rose 10,000, the strongest since March when mild winter weather was boosting construction activity. The financial services sector added 7,000 jobs in September, marking the fourteenth consecutive monthly gain.
Employment on large payrolls—those with 500 or more workers—increased 17,000 and employment on medium payrolls—those with 50 to 499 workers—rose 64,000 in September. Employment on small payrolls—those with up to 49 workers—rose 81,000 that same period. Of the 64,000 jobs created on medium-sized payrolls, 10,000 jobs were created by the goods producing sector and 54,000 jobs were created by the service-providing sector.
Even if this is the actual expansion number in the BLS report, it’s not much to cheer. We add ~200K people to the population each month on average, and at the current (historic low) civilian participation rate of 63.5%, we’d need to add 126,000 jobs just to stay in place. At the rate of adding an additional 36K excess jobs per month, we’d make up the 8 million jobs we’re short now by, oh … early 2031.
However, the ADP report usually — although not always — overshoots the BLS number. The rule of thumb I use is to take 60% of the ADP prediction and use it as a gauge for what the BLS will report. That puts this month’s report at 97,200, or perhaps a round up to 100K. That’s even less to cheer, although it might be tepid enough for Barack Obama to shrug off. That’s not far off from the consensus this week, reported by CNBC, of 118,000 jobs. In fact, CNBC notes that ADP is usually excessively rosy:
The private sector created 162,000 jobs in September, a bit better than expected, as the service sector continued to be the economy’s main employment driver, according to the latest ADP numbers. …
Though economists sometimes change their nonfarm payrolls expectation based on the number, ADP’s count can be volatile and dramatically off the government’s official total, which will be released Friday.
In September, ADP raised hopes that the jobs engine was humming along, with the private sector creating 201,000 positions in August. However, when the government released its own count it found that the actual overall total for the economy was just 96,000 new jobs.
Economists expect the nonfarm payroll number for September to be around 118,000.
Gallup, however, takes a much dimmer view:
U.S. nongovernment workers reported worse job creation conditions in September than they have in any month since February. Gallup’s Job Creation Index score of +21 among nongovernment workers is down from +23 in August and a high of +25 in April. At the same time, the job creation climate within state and local government became even more positive, helping to sustain U.S. job creation nationally. …
Nongovernment workers, which include private- and nonprofit-sector workers, continue to report the most job creation overall, but September’s score marks a retreat from the higher numbers of the previous six months and a movement toward the level seen at the start of the year. Because nongovernment workers make up more than 80% of the monthly sample of employed workers, the decline in that sector helped push the overall national average slightly lower in September.
I’d expect something around 95K. We’ll see what the weekly jobs claim data looks like tomorrow.
Update: A couple of commenters note the adjustment made by the BLS to the total number of jobs, adding 368,000 jobs to the total current employed. The adjustments from those additions have already been made to past reports, and won’t get dumped into this report. It will impact the top-line jobless rate, but the impact will be minimal. In the August 2012 report, there were 142.101 million jobs overall; the addition amounts to 0.26% of that total — not nothing, but not exactly a game-changer, especially if September produces a poor level of new job creation.
Also, I corrected the civilian participation rate above. It’s 63.5%, not 63.1%.