Economists expect slow job growth in the U.S. in October

Economists expect slow job growth in the U.S. in October
Image Source: ©ALotofPeople via Canva.com

Most economists expect slow job growth in the U.S. in October as rehirings got slimmer and layoffs across industries multiplied.

Job growth in the U.S. was predicted to be at 530,000 in October while the unemployment rate is deemed to drop to 7.7%, according to Dow Jones. That figure covers about a 150,000 fall in public sector jobs from the end of impermanent jobs for workers holding the census.

That is compared to 661,000 positions that emerged in September, and an unemployment rate of 7.9%. The employment report is issued at 8:30 a.m. ET Friday

However, while the consensus is given to about a half million jobs, economists present wide-ranging predictions for October payrolls. For example, Citigroup economists expect 800,000 jobs were opened in October.

“We expect a solid increase of 800k nonfarm payrolls in October, consistent with a notable decline in continuing jobless claims even after accounting for a shift from regular state programs to federal unemployment programs,” the Citi economists said. “The unemployment rate should fall further to 7.6% even with a potential modest increase in the participation rate.”

ADVERTISEMENT

However, Mark Zandi, chief economist at Moody’s Analytics, sees only 250,000 nonfarm payrolls were created in October. He added that he foresees 425,000 private sector jobs made, but another 175,000 payrolls were gone in the census and also state and local government jobs.

“I think we’re close to stalling out. The odds of stalling out are pretty high, given the intensifying pandemic going into the Christmas buying season, and without fiscal support,” he said. “It will result in a weak number for retail employment.”

Meanwhile, Diane Swonk, chief economist at Grant Thornton, is expecting 325,000 nonfarm payrolls. She explained that the slow job growth is caused by an increase in layoffs, from airlines and other industries. She believes there will be less holiday hiring by retailers and other businesses, which could affect November’s employment picture.

“I do expect to continue to see gains in professional services, healthcare, manufacturing, and some hiring by retailers,” she said. “Food service will still have gains, but not as strong.”

She stressed that employers hired interns this summer, but there was not the typical transition from internships to actual recruitments that is usually seen during the fall.

Jobs during the holiday season

November is typically the time when recruiment is accelerated for the holiday season. Retailers will not need as many employees as they usually do since there will be less travel and the food service industry will not need to recruit more workers for parties.

“I’d love to be surprised on the upside, but the pace of employment gains are slowing, even though we’re still in the hole by 10 million jobs,” she said.

Moreover, Barclays economists see 650,000 nonfarm payrolls were made in October, but note the slow momentum in the labor market.

“The goods side of the economy is doing okay,” said Michael Gapen, Barclays chief U.S. economist. “Factory output still needs to rise a little further to meet where demand is.”

He sees good growth in manufacturing and construction employment. .

“I would suspect of the 775,000 that we have in private employment, I would just look for a similar breakdown to last month, 10% of that or so may come from the goods side of the economy, and 90% from services,” he said.

According to Gapen, the labor market could be affected by the spreading pandemic. “Presumably, there will be some restrictions on activities, but we’re not thinking states go back to lockdowns,” he said.

ADVERTISEMENT