On Friday, November 1, the U.S. Bureau of Labor Statistics (BLS) will provide another update on the health of the labor market. Job growth has been slowing in recent months and the October jobs report is likely to show much smaller gains than usual, for three reasons:
- The General Motors strike: The GM strike could reduce estimates of payroll employment by up to 70,000 because 48,000 striking workers who are not receiving paychecks will not count as employed, and many GM suppliers have frozen operations.
- Slowing business investment: Business investment fell 3% in the third quarter amid slowing global growth, continued trade policy uncertainty, and increased pressure from investors on businesses to cut costs and prioritize profitability.
- Falling job openings: Job postings fell 4.9% in September from the prior month, according to data from ZipRecruiter’s marketplace, pointing to falling employer demand for workers.
Three additional things ZipRecruiter will be watching closely are
- How the start of holiday season hiring compares with that in previous years;
- Whether measured growth in average wages continues to slow; and
- Whether encouraging recent increases in labor force participation can be sustained amid slower job growth.
ZipRecruiter Predictions for the October 2019 Jobs Report
Based on recent employer and job seeker behavior on ZipRecruiter, here’s what we are expecting to see:
- 90,000 jobs added to payrolls (34% fewer than September’s total, and well below the year’s monthly average of 161K)
- Unemployment up slightly to 3.6%
- Average hourly wage growth steady at 2.9%
Three Things to Watch in the October 2019 Jobs Report
1. Is holiday season hiring getting off the ground?
In 2018, employers were competing to hire seasonal workers as early as August. In 2019, they have been slower to announce seasonal hiring plans or post holiday jobs, according to data from ZipRecruiter’s marketplace. The jobs report will give us another read. Typically, retail employment grows by about 1% each October and by a further 2.5% in November, according to data from the BLS. This year, we expect to see a smaller than usual seasonal bump in retail employment, given projected closures of about 8,600 retail stores this year. The decline could be offset by gains in e-commerce-related seasonal hiring in transportation and warehousing.
2. Is wage growth really slowing, or is slowing wage growth a statistical illusion?
Annual growth in average hourly wages fell from a peak of 3.4% in February to 2.9% in September. This could indicate that employers are making more cautious compensation offers amid fears about the economic outlook. But it could also be the result of an influx of younger, less-educated Americans, women, and minorities into the workforce. Their below-average earnings could be dragging the average down even as each group experiences faster wage growth. Third-quarter data on the earnings of full-time workers released by the BLS add support to this theory. In almost every age group, year-over-year growth in median earnings was above 4% in the third quarter. That is more consistent with what we heard from employers in a recent survey.
3. Can prime-age labor-force participation and employment-population ratios continue to rise?
The most exciting story in recent jobs reports has been the continued rise in the employment-to-population ratio for working-age Americans. Whether the economy can continue to draw people into gainful employment amid slower job growth waits to be seen.
Could We Be Pleasantly Surprised?
Of course, it is possible that the October jobs report will be a positive surprise, with job growth buoyed by a resilient U.S. consumer. The cost of debt is low. Inflation is low. Wages are rising (even if at a slower pace). And the stock market is near its all-time record high. Household balance sheets are strong. It’s a great time for shoppers. Even as economic headwinds rage, the mighty U.S. consumer might just pull us through.