The RSM forecast of the October U.S. jobs report anticipates a net gain of 95,000 jobs on the month, or nearly three times the number needed to keep the labor market stable.
The remarkable stability in jobless claims amid the robust 3.4% growth in the economy during the third quarter of the year suggests that conditions are ripe for an increase in demand for labor.
In addition, the data will be compared to that of a year ago, when the government was shut down, so there is the chance that the monthly figure may come in higher than 95,000.
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The household estimate should result in a 4.2% unemployment rate which reflects an economy at full employment within a context of an 11.5-week median duration of unemployment and a slow increase in those facing unemployment for 27 weeks or longer. That longer-term figure stands at 1.94 million people out of a potential labor force of 170 million.
Despite that, the unemployment rate for men 20 and older stands at 3.9% with women at 3.6%.
The total number for those 25 years and older is 3.3%. For those with a college degree it is 2.5%.
There are 4.5 million people who cannot find work for economic reasons and 22 million people who were not working for non-economic reasons through the end of September.
Given a strong six months of corporate profits, one should expect that increased demand for labor tends to follow in the near term.
Hiring is well positioned to move at a brisker pace than the 35,000 jobs necessary to keep employment conditions stable.
We expect that the major drivers of hiring in October will be healthcare, government, private services, goods production and construction.
We are monitoring the technology and financial sectors because of our conjecture that the substitution of technology for labor in those industries is starting to show up in the data in the form of artificial intelligence.
Both the monthly data and quarterly Employment Cost Index tend to suggest that wage growth is slowing. Over the past year wages have experienced a 0.7% decline and have been negative for six consecutive months.
We do not anticipate that the October data will provide much relief to the stress that is slowly working its way through middle class, working class and working poor households.
The only good takeaway from that dark cloud in an otherwise solid labor market is that wage growth is not yet a cause for concern around wage push inflation.
