Here's a brief outlook for tomorrow's employment situation report.
Let's compare various data out there to last month's data to get an idea of what to expect.
First a job creation report generated by employment services giant ADP. It is estimated based on statistics from ADP's many clients. It covers private jobs only.
- July: 114,000 (revised to 109)
- August: 91,000
Note that the ADP report is often very different from the BLS official report. There have been many claims that it is seasonal adjustment factors that the BLS uses, but no one really knows why.
Challenger Job Cut
A report generated by sifting through and categorizing various announcements of layoffs. It covers both public and private. I find it to be one of the more useful intra-monthly employment reports.
There is a mention in the report this month of more government layoffs due to austerity at federal, state and local levels, including the military. Look for public sector to be raining on the employment parade again.
Weekly Initial Claims
This government report details the number of initial jobless claims that are filed every week. It is a good leading indicator of employment, and the data is available quickly. However, it best to have an average to make it the most effective.
- Last Month Average: 413,750
- This Month Average: 410,250
The Verizon (VZ) strike, which is now resolved, caused a spike the last two weeks of possibly 20,000 claims. That may be skewing the weekly data too high as opposed to the monthly numbers.
Unemployment In Major Cities
On Wednesday August 31, the BLS announced the unemployment rate dropped in most cities. It cited unemployment rates dropping in 193 large metro areas, increasing in 118 and flat in 61. However, a lower participation rate may have affected these statistics.
This will be our first real economic data that could have been affected by the debt ceiling crisis. The crisis quite probably affected some hiring decisions, as managers took a wait and see approach. If the report is similar to last month or better, that would be a good sign for both the economy and employment moving forward.
The numbers are similar to last month's, but noticeably better in the jobless reports like Challenger and the Weekly Initial Claims. The report from the cities also showed mostly better figures.
Therefore, I think the next employment situation report will be slightly improved from last. The private sector will report decent job creation, upwards of 150,000, but the public sector will continue to drag overall employment down. The headline unemployment rate may decrease slightly, but overall this report should see mainly small gains. The participation rate may disappoint. However, there is a wild card here, and that is a big downside possibility due to the debt crisis.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.