Employers Probably Increased Hiring: U.S. Economy Preview

The floodgates holding back a wave of U.S. economic data delayed by the partial government shutdown will begin to give way this week with the release of the September jobs report.

Employers probably added more workers last month than in August and the jobless rate held at the lowest level since 2008, indicating the economy was gaining momentum before the fiscal gridlock in Washington forced some federal agencies to close for 16 days. Other figures this week may show home sales cooled in September and consumer sentiment waned this month.

“Payrolls growth is not booming, but is enough to keep bringing the unemployment rate down,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. “The message going into the government shutdown was that things are picking up. There’s so much uncertainty now.”

Whether the labor market can sustain its advance hinges on how quickly the world’s largest economy can bounce back from the loss of business caused by the fiscal impasse. The dispute will cut fourth-quarter growth by 0.3 percentage point and also means the Federal Reserve will wait until March to begin trimming bond purchases, according to the median forecasts of economists surveyed last week.

Payrolls rose by 180,000 workers in September, the most since April, after a 169,000 gain the prior month, according to the median forecast of 93 economists surveyed by Bloomberg ahead of Labor Department data to be released Oct. 22. The report, delayed by the shutdown that ended Oct. 17, was originally due on Oct. 4.

Holiday Hiring

Even as the debate on fiscal policy heated up last month, retailers began announcing plans to add workers for the holiday-shopping season.

Wal-Mart Stores Inc., the world’s largest retailer, is hiring 55,000 seasonal employees, a 10 percent rise from last year. Target Corp. said it plans to take on about 70,000 workers, or 20 percent fewer than a year earlier. Kohl’s Corp. will add about 53,000 workers for the holiday season, about the same as last year.

The projected gain in nationwide payrolls for September would still be below the average 195,000 monthly increase in the first half of 2013. Through August, the U.S. had recovered 6.8 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009.

The jobless rate, derived from a separate Labor Department survey of households than the payrolls tally, was 7.3 percent last month, according to the median projection in the Bloomberg survey. It matched the August reading, which was the lowest in more than four years.

No Default

President Barack Obama last week signed legislation that funds the government through mid-January and suspends the nation’s $16.7 trillion debt limit, for now ending the threat of default, which economists had warned could tip the U.S. back into a recession.

The October employment report will be pushed back to Nov. 8 from the originally announced Nov. 1, according to the Labor Department’s website.

Fed policy makers, scheduled to gather Oct. 29-30, are trying to gauge the strength of the U.S. expansion without federal economic data that was suspended after the government closing. The central bankers will pare the monthly pace of asset buying to $70 billion from $85 billion at their March 18-19 meeting, according to the median of 40 responses in a Bloomberg survey last week.

Record Stocks

The Standard & Poor’s 500 Index had its best week in three months as speculation grew that the Fed will delay cutting monetary stimulus. The S&P 500 added 0.7 percent to 1,744.50 at the close in New York on Oct. 18, extending an all-time high. The gauge rallied 2.4 percent in the past five days, for its biggest weekly advance since July 12.

While the labor market has shown improvement, uncertainty stemming from Washington related to the shutdown and the debt limit may be a source of concern for employers.

San Francisco based URS Corp., a provider of engineering and construction services, furloughed about 3,000 employees, saying the total includes employees idled by the closing of a government facility where they work as well as those directed by U.S. officials to halt operations or cut staffing.

Among other companies paring their workforce, San Francisco-based Wells Fargo & Co., the biggest U.S. mortgage lender, last week said it eliminated an additional 925 jobs in its home-loan unit and has cut more than 5,700 since midyear.

In other data this week, the National Association of Realtors may report tomorrow that sales of previously owned homes cooled to a 5.3 million annual rate in September from a six-year high of 5.48 million the prior month, according to the Bloomberg survey median.

The Thomson Reuters/University of Michigan final index of consumer sentiment may indicate the government’s partial shutdown and the debt-ceiling debate caused Americans’ moods to sour. The gauge decreased to a nine-month low of 75 from 77.5 in September, economists predicted before the Oct. 25 report.

                       Bloomberg Survey

                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
Exist Homes Mlns         10/21     Sept.      5.48      5.30
Exist Homes MOM%         10/21     Sept.      1.7%     -3.3%
Nonfarm Payrolls ,000’s  10/22     Sept.      169       180
Private Payrolls ,000’s  10/22     Sept.      152       180
Manu Payrolls ,000’s     10/22     Sept.       14        5
Unemploy Rate %          10/22     Sept.      7.3%      7.3%
Hourly Earnings MOM%     10/22     Sept.      0.2%      0.2%
Hourly Earnings YOY%     10/22     Sept.      2.2%      2.1%
Avg Weekly Hours         10/22     Sept.      34.5      34.5
Richmond Fed Index       10/22      Oct.       0         0
Import Prices MOM%       10/23     Sept.      0.0%      0.2%
Import Prices YOY%       10/23     Sept.     -0.4%     -1.0%
FHFA HPI MOM%            10/23      Aug.      1.0%      0.8%
Initial Claims ,000’s    10/24     19-Oct     358       340
Cont. Claims ,000’s      10/24     12-Oct     2859      2875
Markit Manu. PMI         10/24    Oct. P      52.8      52.5
JOLTs Job Openings       10/24      Aug.      3689      3765
KC Fed Mfg               10/24      Oct.       2         2
U of Mich Conf. Index    10/25     Oct. F     75.2      75.0
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