The U.S. September employment report will most likely feature a net gain in total employment of 375,000 and a decline in the unemployment rate to 5.1% when it is released on Friday.
We anticipate a net gain in total employment of 375,000 and a decline in the unemployment rate to 5.1%.
The report will most likely reflect a mix of constraints in hiring related to Hurricane Ida and the reopening of schools and day care centers, as well as seasonal adjustments inside the education sector that may dampen the top-line estimate.
On the policy front, the next three jobs reports will be key to determining the start of the Federal Reserve’s unwinding of its large-scale asset purchases.
Unless there is an unexpectedly low jobs number, we do not see the September report moving the needle on the Fed’s intent to announce its tapering operations at the November meeting and to start paring back its asset purchases in December.
Labor market reports through the middle of the month suggest that it will be the October, November and December reports before we observe meaningful improvement in the labor force participation rates and the employment-to-population ratio.
In our estimation, the September report may be somewhat disappointing and is one of the primary factors behind our solid but somewhat dour employment forecast compared to the outlook of many just a few months ago.
Schools reopening after Labor Day along the Pacific Coast and in the Northeast will push forward a quicker pace of prime working age women back into the labor force into the final three months of the year. This will most likely seal the deal on the Fed’s decision to shift the pace of its asset purchases.
Like the Fed, we closely monitor the participation of prime-age labor. For men 25 to 54, that stands at 88.4%, and the percentage of women working in that cohort is 75.4%. Because prime-age women of color bore the brunt of the adjustment in employment during the worst of the pandemic, we are watching the movement of that cohort back into the workplace to ascertain when the United States has moved back toward full employment.
The Census Bureau’s household pulse survey showed that the number of people not working because of a lack of child care plummeted to the lowest levels of the pandemic. While we anticipate that there will be some improvement on the month for that group, it will most likely not offset restraints on hiring elsewhere and may be lost inside the seasonal adjustment issues at the Bureau of Labor Statistics.
Outside of those restraints, we think the impact of the delta variant has peaked, and that easing will lead to a modestly quicker pace of hiring than in August and result in generally strong hiring for construction, leisure and hospitality, business services and retail.
But supply chain issues and factory shutdowns in the auto sector will most likely restrain manufacturing hiring and new jobs created in the goods-producing sector.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
