September Jobs Preview

Tomorrow the monthly employment report for September will be released. With some of the recent economic data turning stronger after a slight summer slowdown, this report could provide an important clue as to how legitimate the recent uptick really is. Not to mention with the election right around the corner, economic growth or lack thereof will be heavily watched. According to our Chief Economist John Canally, “Fed officials have said job gains in the range of 80,000-150,000 per month are sufficient to tighten the labor market and push up wages, suggesting this report may get them a bit closer to a rate hike later this year.”

  • Expectations are for job gains of 174,000, an unemployment rate of 4.9%, and a 2.6% year-over-year increase in hourly earnings.
  • The August jobs report came in at 151,000 jobs created, which is solid, but not quite the 180,000 consensus. Here’s the catch—the August number has missed each of the past five years and every single time it was revised higher in September. Sixth time’s the charm?
  • September has created jobs five straight years, the longest since a 10-year win streak during the 1990s.
  • The unemployment rate has been beneath 5% for four straight months, the longest streak beneath 5% since 24 straight months that ended in late 2007.
  • In fact, the unemployment rate has been 4.9% for three consecutive months. Should it hit four straight months at 4.9%, that would be the first time since the first half of 2012 the unemployment rate was the same for four consecutive months (it hit five straight at 8.2% the first half of 2012).
  • Jobs have been created for a record 71 straight months. Right before the Great Recession, we hit 46 straight months of growth and the previous record was 48, which ended in July 1990.
  • The 12-month moving average of jobs growth has been above 200,000 for 28 straight months for only the fifth time since 1939. The last time it got this far was a 53-month streak that ended in October 2000.

The Federal Reserve passed on a rate hike in September, as expected. We continue to believe it is likely to hike rates in December. A strong number tomorrow could go a long way to improving those odds.

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