Independent Strategy

Tags: Payrolls

We’ve seen a further deceleration in the pace of employment growth, the September non-farm payrolls report showing just 194k jobs were created in the month, down from an upwardly revised 366k in August and well below the consensus guess of 500k.  Despite the glut of job openings there was a further decline in the participation rate too, down 0.1% pts to 61.6%, which is unchanged from a year ago.  That contributed to another steep fall in the unemployment rate, U3 down to 4.8% from 5.2% and U6 to 8.5% from 8.8%.

Labour market growth slowed a little more than expected in August, amid some disruption to the services recovery from the Delta strain.  But there were still +235k jobs added (mkt +750k) and we saw upward revisions to prior months, so the net impact was still positive, leading to a further decline in the unemployment rate to 5.2% from 5.4% and the U6 rate dropped down to 8.8% from 9.2%.  The participation unchanged at 61.7%.  Govt payrolls shrank a little after recent strong gains (-8k) but manufacturing continued to grow (+37k).  Weekly hours were 34.7 from a downward pay revised 34.7, which by itself remains elevated from its pre-pandemic range.

Another month of strong payroll gain, the headline number showing a net gain of 943k jobs (mkt 870k) while revisions also shifted upward (a net 146k added for the past three months).  703k of the July gain came from private payrolls (mkt 700k).  Manufacturing added 27k jobs and government 240k, accounting for all of the surprise.  Labour participation edged up to 61.7% which left the unemployment rate at 5.7% (down from 5.9% but above the 5.4% median guess).  Prime age participation (25-54) saw a further surge, for both male and female workers.  This is a positive trend and reinforces our lack of concern for labour scarcity.  It’s important to contrast this with the post-GFC period where prime participation continued to fall after the initial crisis.

Strong payroll gains with some additional impetus from upward revisions.  Overall the economy added 850k jobs in June (mkt 700k) up from 583k in May (revised from 559k), of which 662k came from private payrolls (mkt 600k).  Manufacturing added 28k jobs and government 188k.  Labour participation unchanged at 61.6% and the unemployment rate actually ticked up to 5.9%, as job gains were netted off with an increase in the labour force.  Note prime age participation (25-54) increased for both male and female workers.  This is positive and should dampen worries about labour scarcity.

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POST » 4th June, 2021 » US May Non-Farm Payrolls

While the US added 559k jobs in May according to the non-farm payrolls report, this marked another downside surprise for the series where the median estimate was up at 650k.  There was a modest upward revision to the April numbers (278k vs. 266k initially reported) but that doesn’t move the needle.  Private payrolls growth came in at 492k while manufacturing payrolls added 23k job and government 67k.  The unemployment rate dropped to 5.8% from 6.1% but this was aided by a decline in participation (61.6% from 61.7%).

The headline non-farm payrolls jobs figure surprised on the downside in April, with 266k jobs created versus the median forecast of 978k.  And the March figure was also revised downward by 146k.  Obviously, it was private payrolls that disappointed (+218k vs. 893k survey) while manufacturing jobs contracted slightly (-18k).  Government couldn’t make up for that but did offer a +48k contribution.  The unemployment rate actually ticked back to 6.1%, a result of the 0.2% pt improvement in participation and the work week ticked up again.

February Non-farm payrolls recorded a 379k gain, comfortably exceeding the +182k median forecast.  This leaves the 3m average at +80k.  Private sector payrolls were significantly better than the headline print at +465k, manufacturing added +21k jobs while government dropped -86k.  The surprise might have been even higher were it not for the weather events in Texas, which was behind the 939k people not at work due to the weather (Feb average is 385k).  The unemployment rate ticked down to 6.2% and participation was unchanged at 61.4% despite this.  The workweek did drop though, to 34.6, although this is from a rather elevated 34.9.

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POST » 8th January, 2021 » US December Non-Farm Payrolls

December Non-farm payrolls recorded a -140k drop, quite a bit below the markets +71k guess.  This takes the 3m average down to +283k.  Private sector payrolls were a little better than the headline print at -95k, helped by manufacturing which added +38k jobs while the decline in government moderated to -45k.  That was still the fourth consecutive decline but is largely census related.  Despite the headline miss revisions were very positive, +91k in November alone

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POST » 4th December, 2020 » US November Payrolls Report

November Non-farm payrolls number came in at +245k (mkt +469k), bringing the 3m average down to +5227k.  Private sector payrolls were a little better again at +344k but there is a sequential slowdown happening there too.  Manufacturing payrolls grew by 27k while we saw another month of government job losses, -99k, the third consecutive drop.  Revisions overall were down a bit, Oct NFP revised down to 610k vs. the 638k initially reported.

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POST » 6th November, 2020 » US October Payrolls

October Non-farm payrolls number came in at +638k (mkt +600k), leaving the 3m average at +934k.  But the private payrolls number comfortably bettered expectations once again at +906k vs. 690k mkt.  Manufacturing payrolls grew but not as much as hoped (+38k vs. +50k est) while we saw another month of government job losses, -268k following on from -220k in Sep.  Revisions overall were slightly positive though

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POST » 2nd October, 2020 » US September Payrolls

September non-farm payrolls number came in under expectations at +661k (mkt +850k).  But the private payrolls number bettered at +877k vs. 850k mkt, while manufacturing payrolls also beat (+66k vs. +35k est) with a loss of 216k on the government side explaining the headline miss.  There was a sizable upward revision to the jobs gained in August too.

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POST » 4th September, 2020 » US August Non-farm Payrolls

August’s non-farm payrolls report came out basically in line with expectations (+1.371mn vs +1.400mn consensus).  While we saw a modest downward revision to the July release, the report reinforces the overall “repairs underway” story for the labour market.  Part of this was due to further strong growth in government payrolls (+344k), private payrolls (1.027mn) were rather further from the markets more confident expectations.

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POST » 7th August, 2020 » US July Non-Farm Payrolls

Another solid non-farm payrolls report, with 1.763mn jobs added in July, taking the 3-month gain to 9.27mn.  That means the US has now recovered roughly 40% of the jobs shed during the turmoil of March and April.  The report cements confidence that the labour market continues to repair, mirroring the conclusions of yesterday’s weekly jobless claims, if not the lower than expected ADP print we got on Wednesday.

The disruption from the Coronavirus continues to impact the data with the employment numbers for May showing a significant deviation from expectations and the near 2mn loss reported in the May ADP report.  Indeed, based on the preliminary numbers the economy added 2.51mn jobs over the month, which compares to the 20.69mn jobs lost in April.  Methodological problems are again in evidence ...

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POST » 3rd April, 2020 » US March Non-Farm Payrolls

Bleak payrolls report.  While the median survey was always going to be a short in the dark, the -701k decline in jobs was significantly more troubling than the mkts -100k guess.  That’s the worst number since March 2009, a period of losses that saw five consecutive payrolls figures below the -700k mark starting from November 2008.  Looking at the past fortnights jobless claims figures the April number and revisions to this release will paint an even bleaker picture of the labour market.  In the household survey nearly 2.987mn jobs were recorded lost.

Tracking the strong ADP release on Wednesday, the January non-farm payrolls report also comfortably beat expectations.  Weather has helped a bit last couple of months, with seasonal disruptions lower than normal, but that doesn’t detract from the underlying strength of the labour market.

Slight undershoot in the December payrolls report, but the 145k jobs created is only modestly below the 164k market guess and while the revisions from November were slightly downward that was a strong report in itself.  Over 12-months revisions are very mildly negative but not showing any real deterioration in trend since the summer.

A positive surprise, particularly after the weak ADP number on Wednesday, with non-farm payrolls +224k in June, although there were mild downward revisions for the previous two months (-11k).

Mirroring the weak ADP figure the May payrolls numbers also surprised on the downside.  Revisions also downward, which also showed up in ADP’s release.  The participation rate was stable, as was the unemployment rate.  Hourly earnings were a little softer than expected and hours worked were flat at 34.4, which is down versus a year ago, dampening gains in weekly wage growth.

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POST » 5th April, 2019 » US March Payrolls Report

A stronger payrolls number, but after the disruptions of last month (weather knocking around 80k off the headline figure) the bounce could still have been a stronger.  But enough to maintain sold employment growth, which continues to defy estimates that the labour market is tight...

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