Because of the longest government shutdown in American history, we will get a most unusual jobs report on Friday.
We expect a net increase in total employment of 120,000 jobs over the two months, including an increase of 80,000 in October and a slowing to 40,000 in November.
We expect an increase to 4.5% in the unemployment rate for October which will remain steady for November. We see average hourly wages increasing by 0.3% by in both months.
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The risk to our forecast is a downward revision to the September jobs estimate in addition to the uncertainty in both months because of the shutdown and trade volatility.
In addition, the difficulty in finding qualified and willing workers in manufacturing, construction and agricultural because of tight immigration policies will most likely dampen total hiring and add an additional layer of difficulty for what is a most atypical jobs report.
Still, the impact of the government shutdown on the Bureau of Labor Statistics’ payroll estimate should be minimal because furloughed employees are not counted as unemployed in the establishment survey.
Those employees are considered unemployed in the household survey, though. That inclusion means the unemployment rate, which is derived from the household survey, should increase.
In our estimation, the labor market should remain on solid footing in October and November, helped by seasonal hirings in leisure, hospitality, transportation and warehousing.
Yet we expect the boost to be a bit more modest than in past holiday seasons as consumer demand down market is affected by rising prices. We doubt that firms moved as aggressively to add labor when supplies were short on the shelves because of the trade shock.
