The week in review
- ADP private payrolls rose by 42k
- Consumer sentiment fell to 50.3 in November
- ISM mfg./ svcs. PMIs came in at 48.7 and 52.4, respectively
The week ahead
- Initial and continuing jobless claims
Thought of the Week
The federal government shutdown has now become the longest in history, resulting in a second consecutive missed jobs report from the BLS. In its absence, we can lean on alternative data sources to gauge the health of the labor market. This month, these sources have provided mixed signals.
ADP reported a 42k gain in private payroll jobs in October after a 32k decline the month prior. Both the ISM Services and Manufacturing employment indices improved, with the pace of contraction slowing in both sectors, while state level initial jobless claims for the month ending in the October survey week actually fell from September. Other indicators, however, suggest caution is warranted. Announced seasonal hiring plans, according to Challenger, Gray & Christmas, are tracking well below normal levels, while layoff announcements over the past two months have reached their highest levels, for September/October combined, since 2008. New job openings, reported by Indeed, have continued to fall steadily while consumer perceptions of labor market conditions were at their second lowest level in over four years in October according to the Conference Board. All of this aligns with the increase in the real-time unemployment rate forecast from the Chicago Fed to 4.4% in October.
Considering these and other indicators, our in-house model estimates that 52k jobs were added in September but that 35k jobs were lost in October. Notably, this forecast assumes a 120k decline in federal government employment in October as most of the 150k+ employees who took a buyout this spring fell off federal payrolls. While the Federal Reserve is also lacking official data on jobs, if their reading of labor market weakness aligns with ours, a further rate cut in December remains in the cards.
Chart of the Week: Source: Bureau of Labor Statistics, J.P. Morgan
Asset Management. Past performance is not indicative of future returns.
Thought of the week: Source: ADP, Challenger, Gray & Christmas,
Chicago Fed, Conference Board, Indeed, ISM, J.P. Morgan Asset
Management.
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