Get ready for Payrolls Tuesday
Jobs growth may pick up slightly in September
Thanks to the government shutdown, the Labor Department will release the key nonfarm payrolls report 18 days later than initially scheduled. Economists polled by MarketWatch expect 185,000 new jobs in September, up from 169,000 in August. The unemployment rate is seen staying at 7.3%.
No question that the report — by far and away the economic release that shifts stock and bond markets the most — will be less influential this time around.
Even hawks like the Dallas Fed’s Richard Fisher say there’s basically no possibility that the Federal Reserve will taper the central bank’s $85 billion-a-month bond purchase program later this month.
And the data is obviously less current than a typical jobs report, which usually is released on the first Friday of the month. Furthermore, the September jobs report doesn’t include the impact of the shutdown, which took place in October.
But don’t completely discount its impact.
David Rosenberg of Gluskin Sheff said in a note to clients that the payrolls report, as well as Thursday’s job openings and labor turnover report, will have significance to markets.
“Since so much rests on the labor backdrop as far as the Fed is concerned, these numbers will hold the key for policy expectations, even if ‘taper’ is not going to happen at the October FOMC meeting,” he wrote.
“If the data suggest that the labor market is improving and the outlook brightening, and if we miraculously end up with a successful budget conference between the House and the Senate, due for December 13th, a modest December taper cannot be ruled,” he added.
Joseph LaVorgna of Deutsche Bank suggests there could be upward revisions as well — he notes August nonfarm payrolls have been revised higher in seven of the last 10 years.
He also points out that previous shutdowns and debt-ceiling crises just haven’t had that big an impact on economic growth.
Following the August 2011 debt downgrade, the economy grew at a 4.3% annual pace over the next two quarters — the best two-quarter period since 2003. After the 1996 shutdown, the economy grew at a 4.9% annual pace.
The Philadelphia Fed’s October manufacturing survey — though just one data point, and a volatile one — suggests the economy didn’t go seriously off the rails during this shutdown, either.
To be sure, not everyone’s so sanguine. Standard & Poor’s in a widely-circulated analysis said the shutdown has taken $24 billion out of the U.S. economy.
Ethan Harris of Bank of America Merrill Lynch points to a big drop in consumer confidence, and added that past episodes of fiscal uncertainty led to slowdowns in capital investment and hiring.
The Fed’s Beige Book — a collection of anecdotes about the U.S. economy — still reported “modest to moderate” growth and saw slowing in four out of 12 regions.
It’s unclear if some of the scheduled releases from the Commerce Department, on new-home sales and durable-goods orders, will be released; that agency as of press time had not posted its post-shutdown agenda.
