By Chris Cermak
WASHINGTON (MNI) – Monthly payrolls are expected to signal more
weakness in the labor market in September when excluding the temporary
effects of a strike by Verizon workers.
Payrolls are expected to have increased by 80,000 in September
after posting zero net job gains in August, while the unemployment rate
is forecast to edge up 0.1 percentage point to 9.2%, according to a
survey of economists by Market News International. Private payrolls are
expected to grow by 110,000 after a gain of 17,000 the previous month.
The end of Verizon’s strike will have added 45,000 to September
payrolls after subtracting the same amount in August. Excluding
Verizon’s one-time impact, total payrolls gains would be 35,000 for
September, down from what would have been a net gain of 45,000 without
the strike in August.
Claims also trended slightly higher in September, with the
four-week moving average at 418,000 for the week ending September 24,
compared to an average of 411,000 through the August 27 week. Initial
claims have declined again in the last two weeks, coming in Thursday at
401,000 for the week ending October 1.
The weak claims figures reflect ongoing uncertainty in the economy
that has put many company hiring plans on hold. Federal Reserve Chairman
Ben Bernanke in testimony before Congress Tuesday noted the recent rise
in initial claims “point to the likelihood of more sluggish job growth
in the period ahead,” despite the Fed’s efforts to inject further
monetary stimulus into the economy.
MNI’s Reality Check this week found many employers are resorting to
temporary or part-time workers instead of taking on long-term hires. The
number of online job advertisements fell for the fourth straight month
in September, according to the Conference Board, while the group’s
employment trends index edged down 0.2%.
A growing trend of layoffs could also put downward pressure on
payrolls in the months to come. Jacob Oubina, senior US economist with
RBC Capital Markets, points to the 212% year-over-year jump in layoff
intentions for September, as reported by Challenger Wednesday.
“While a lack of hiring had already been in place,” said Oubina,
“now you’re starting to see the firing pick up the pace too.”
The surge in September layoffs came in large part from multi-year
cutbacks totaling 80,000 by Bank of America and the U.S. Army, but
Oubina told MNI that the two announcements will not be easily absorbed
by an already sluggish labor market.
Manufacturing could be a minor bright spot in Friday’s payrolls
report after falling by 3,000 in August. The employment indexes of most
purchasing manager surveys gained this month, including the national
Institute for Supply Management’s manufacturing report, which Monday
said its employment index climbed to 53.8 from 51.8 in August.
By contrast, the employment index of ISM’s non-manufacturing survey
fell into the negative, on Wednesday posting 48.7 after 51.6 the month
ADP Employment meanwhile reported job gains of 91,000 for
September, excluding the Verizon strike, suggesting to some analysts the
actual payrolls numbers could tilt toward the upside. The report, which
has a mixed track record in predicting payrolls, caused a spike in
equity futures and altered only slightly the market consensus for
payrolls ahead of Friday.
The U.S. Labor Department is scheduled to release September’s
Employment Situation at 8:30 a.m. ET Friday.
— Chris Cermak is a Washington reporter with Need to Know News
** Market News International Washington Bureau: 202-371-2121 **