Is the hot labor market finally turning around? That's the key question in the September jobs report. Conditions remain tight, with data showing low jobless claims, job vacancies showing firms retaining existing workers, and sub-indicators pointing to a labor market where job losses can quickly find new ones. In addition, sector indicators such as ISM, rising financing costs of companies and operational uncertainties around the recession indicate that this momentum should lose momentum.
In the details of the September employment report, the market expects an increase of 255K. The unemployment rate, which was 3.7% in August, is expected to remain the same in September. When calculated with the household survey data and the current 62.4% participation rate, an increase of more than 200K reduces the unemployment rate, and when we reduce it with the weak ISM indicators and the classical September deviation rate, the unemployment rate will be 3.7% in an employment increase that will be approximately 100-150K. (if there is no revision) will remain constant. The participation rate is expected to remain the same. Before the pandemic, workforce participation was over 63%, with the 10-year average rate at 62.6%. A shock expansion of the pool will probably not be expected due to reasons such as the changing workforce structure, those reaching retirement age, the aging population, and the jump in labor supply approaching normal limits.
The survey period of the September report coincides with the back-to-school recruitment period. Any large jumps in data are not very signaling and should not be treated as a stand-alone indicator, as they can be caused by seasonal adjustment issues. Of course, there is also the possibility that we may see data that deviates greatly from expectations. Although seasonally working part-time people have an upward impact on July and data, there may be a decrease due to the return to school in September. However, after the pandemic, it will be necessary to include economic reasons for part-time workers, so the calculation should be considered multidimensional in this area as well. It is also important how this figure will break the trend of the last two months.
If we look at the Fed's point of view; The determining factor is the labor market. With hiring freezes or layoffs from large companies and the growing number of people working part-time for economic reasons, small cracks may begin to appear. But while job opportunities are still at historically high levels, workers are still able to switch jobs easily. Combined with falling productivity, this will put upward pressure on wages in the short run. This means that the Fed's rates will continue to rise despite global economic weakness.
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