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U.S. employers likely hired at a higher rate in September after a disappointing August, with more people returning to the workforce as new coronavirus infections slowed and other pressures on the workforce. labor market declined at least temporarily.
The Labor Department is expected to release its September employment report on Friday morning. Here are the key metrics expected from the report, compared to consensus estimates compiled by Bloomberg:
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Evolution of the non-agricultural wage bill, September: +500,000 expected, +235,000 in August
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Unemployment rate: 5.1% expected, 5.2% in August
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Average hourly compensation, from one month to the next: 0.4% expected, 0.6% in August
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Average hourly compensation, from one year to the next: 4.6% expected, 4.3% in August
Non-farm payrolls are expected to pick up from the much weaker-than-expected impression in August, when renewed fears over the coronavirus deterred more workers from re-entering the workforce.
The September report is also expected to show a ninth straight month of net payroll gains in the US economy. But even after months of growth, total employment has yet to regain its pre-pandemic levels. The civilian labor force is still down by 2.9 million people, compared to February 2020.
“I think we’re going to see another solid report,” said Nela Richardson, ADP chief economist. Yahoo Finance Live said. “The main driver, truly the hero of the job recovery, will be the one sector that has been hit the hardest. It is leisure and hospitality.”
Employers in the leisure and hospitality sector added zero net jobs in August after adding around 400,000 in June and July as the resurgence of the Delta variant weighed on high-contact industries. But the August report was only due to reflect a temporary moment of weak hiring in the service sector, given that coronavirus cases have moderated in recent weeks.
In addition to falling new infection rates, a number of other factors may have helped boost hiring in September. Federal enhanced unemployment benefits expired nationwide on September 6, or just before the Department of Labor’s employment survey period during the week of September 12. And many schools and daycares have resumed in-person operations, helping to ease some of the childcare burdens that had kept others out of the workforce during the pandemic.
While the first impacts of these developments may appear in September, further improvements are even more likely in the coming months, some economists have noted.
“Whatever happened in September, we expect much larger increases in payrolls over the next few months as Delta fades and labor supply rebounds after the end. improved benefits and the reopening of schools and daycares “, Ian Shepherdson, Chief Economist. for Pantheon Macroeconomics, wrote Thursday in a note.
But even with an expected pick-up in hiring, September’s unemployment rate probably fell only modestly, to 5.1% from 5.2% in August.
“While we expect a high rate of hiring, we also expect a larger workforce gain than we’ve seen in recent months,” Wells Fargo senior economist Sam Bullard wrote in a note. earlier this week. “Together, this should slow the fall in the unemployment rate in September after falling 0.7 percentage points in the past two months.”
And in terms of average hourly earnings, economists are still looking to see a strong footprint on wage growth, especially year over year. This is because employers have increased wages and incentives to compete to recruit workers in order to fill many vacancies and meet high demand. Average hourly earnings are expected to accelerate year over year for a fifth straight month in September and reach their fastest rate since February.
However, September also likely saw an increase in hiring among service sector workers at the lower end of the pay scale. That should lower average hourly earnings month over month, or to 0.4%, from 0.6% in August.
“A reasonably good employment report”
For market participants, the September jobs report will serve as a key indicator for the timing of a change in monetary policy by the Federal Reserve.
Fed officials suggested that the economy had already met the central bank’s inflation targets and that the only hurdle to clear was the job market. Last month, Fed Chairman Jerome Powell suggested that at least a decent jobs report in September would be enough to suggest the economy had improved to the point that it no longer needed the extraordinary support. of the Fed’s monetary policy.
“It wouldn’t take a knockout, a great, super strong jobs report,” Federal Reserve Chairman Jerome Powell said at his last post-FOMC press conference in September. “It would take a reasonably good job report for me to feel this test is satisfied.”
The Fed has previously signaled that it plans to start scaling back its crisis asset purchase program by the end of the year, or to slow the pace of mortgage-backed securities purchases and treasury bills from its current rate of $ 120 billion per month.
“Based on comments from President Powell and other FOMC members at and after the September FOMC meeting, there appears to be a low bar for a reduction announcement in November,” added Wells Fargo’s Bullard. “We suspect the September jobs report will erase that bar.”
Ahead of Friday’s report, other employment indicators also pointed to a strengthening labor market. The ADP private sector wage report released on Wednesday showed that a better-than-expected 568,000 jobs returned to the private sector last month. The Institute for Supply Management’s manufacturing and service employment indices held steady in expansionary territory in September, and weekly jobless claims fell to a pandemic-era low earlier this month.
This post will be updated with the results of the Department of Labor’s September jobs report on Friday at 8:30 a.m.ET. Check back for updates.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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