I’m skeptical that monthly job reports from the Bureau of Labor Statistics move voters in any way. People live in the real economy, and they’ve already made up their minds about it. Nevertheless, tomorrow’s jobs report, which despite Hurricane Sandy will arrive on schedule, will no doubt get hyped as TEH MOST IMPORTANT JOBS REPORT EVAH, and at least provide talking points for the campaign trail (which restarts in earnest today).
So what should we expect? ADP, which just changed its methodology, announced this morning their preliminary estimate for private-sector jobs in October, predicting an increase of 158,000. This is up sharply from their September estimate of 88,000, but it’s very hard to judge the two together, because of the change in methodology. It did beat the consensus for the forecast, however. ADP has been often wildly at variance with the BLS report, so it’s hard to glean much information from it.
First-time jobless claims fell slightly to 363,000 last week. The slightly more useful four-week rolling average, which encompasses the month of October, stands at 367,250, which is consistent with modest job growth. These claims have been fairly constant over the entire year, although you can expect a spike next week, when the survey will look at the week of Hurricane Sandy. Similar natural disasters caused spikes in the first-time jobless rate.
One negative indicator is the layoff report from consultants Challenger, Gray and Christmas. This shows that planned job cuts spiked 41% in October, to 47,724. Weak quarterly earnings reports are seen as the culprit. Layoffs remain below last year’s pace overall, but elevated in the month of October.
Plug this all in and what have you got? The consensus forecast calls for an increase in 125,000 jobs. That would be an increase from last month’s increase of 114,000, but below the increases in July and August (August and September will get revised in the report). This generally matches what we’re seeing in the ancillary reports, and shouldn’t be a number that would arouse joy or sadness in either Presidential campaign. However, with the volatility of last month’s topline unemployment rate, derived from the household survey, I wouldn’t be surprised if you saw it increase from the current level of 7.8%.
Either way, it’s a preliminary report, and we probably shouldn’t put as much weight on it as we will, especially with the political implications headed into the election.