From the press release:
“Job gains in September eased a bit when compared to the past 12-month average,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “We also observed softening this month in trade/transportation/utilities, possibly due to a continued tightening U.S. labor market and lackluster consumer spending.”
Mark Zandi, chief economist of Moody’s Analytics, said, “The current record of consecutive monthly job gains continued in September. With job openings at all-time highs and layoffs near all-time lows, the job market remains in full-swing. Job growth has moderated in recent months, but only because the economy is finally returning to full-employment.”
August and July are now 175K and 196K, respectively. In last month’s report, they were 177K and 194K, so there no net change to previous months.
“Full-employment” is usually accompanied by wage pressures. Despite continuing contentions that there are wage pressures, the numbers from other government reports don’t show it. The linked report shows a 2.4 percent increase in average hourly earnings and a 1.5 percent increase in average weekly earnings during the 12 months ended in August. In the context of 1.1 percent (all-inclusive) to 2.3 percent (excluding food and energy) inflation, that’s not evidence of wage pressures, and calls into question either the idea that we’re near full employment, the government’s unemployment rate measurement — or both.
CONFERENCE CALL NOTES:
MARK ZANDI: Another month, another solid employment number.
Pretty much in the middle of monthly employment gains (!?).
Energy and parts of mfg. continue to be weak. Info services is laying off. Otherwise, stronger growth. Some softness among smaller companies and in construction. Larger companies are picking up. All in all, looks pretty good.
Job openings are at record highs, layoffs are as low as you can get. Quits are where they were at the end of the last business cycle peak. Hard to put finger on any blemishes.
ADP will be providing more sector data in future reports. Also re-specifying the data relationships with BLS report. Believes model “accuracy” will improve measurably and meaningfully.
Job growth broad-based around the country. Relatively weak in OH and PA but OK in other swing states. Strong in CO, NC, NV, and NH not too bad. Economic backdrop in the swing states looks to be pretty good, and none are struggling.
Longest string of positive numbers ever.
Chris Rugaber, AP — Want broader context given weak consumer spending, mixed other data. Any sign of slowing.
Answer: The economy has been growing at a remarkably stable pace. GDP growth is tracking 2.5 – 3.0 percent in the third quarter. We’ll get around 2 percent this year, consistent with past five years. There will be slowing in job growth because we are close to full employment, and will slow to 85K per month, which is workforce growth. Then wage growth will pick up.
In terms of the Fed, it should begin to raise rates consistently. Won’t raise rates before election. Should be a December rate hike. Rates should rise next year more consistently. Inflation target is 2 percent. Pressure to normalize will intensify. Expected them to raise rates more quickly this year, but they didn’t. Diff between what they do and what Z thinks they should do (supposedly unusual).
ME (policy given weak growth): Growth has been weak, insists that we have been in seven years of expansion. Great Recession was very severe, and would have been close to 1930s Depression without interventions. The downturn’s severity and its leverage problems b/c of “financial crisis.”
GDP potential growth is lower than its been because of labor force growth. (2-2.5 percent during 1970s and 1980s, now it’s 0.5 percent and will go lower if we don’t change immigration law. 2 percent today is like 3 percent during 1970s and 1980s (!)