Like the March, April, May, June, July and August reports before it, the September edition of the
employment report, due out at 8:30 a.m. EDT Friday, will be muddled by the lingering effects of the census.
The good news is, this is almost over. Most of the roughly 600,000 temporary workers who were hired by the
in the spring to conduct the decennial headcount have gone back to doing whatever they were doing before. Not all, however. Economists estimate that some 30,000 temporary workers dropped off Census payrolls in September.
The deeply revered, anxiously awaited employment report measures how quickly the economy is growing by counting the number of new nonagricultural jobs created each month. The average increase in nonfarm payrolls over the 12 months ended in August was 202,000.
For September, economists polled by
are forecasting a gain of 232,000, on average. The importance of the Census layoffs is this: If nonfarm payrolls did in fact grow by 232,000 in September, and the Census Bureau did in fact lay off 30,000, then outside the Census Bureau, 262,000 new jobs were created. In August, for example, nonfarm payrolls shrank by 105,000, their largest drop in nine years. But that included a drop in Census payrolls of 158,000, meaning that the rest of the economy created 53,000 new jobs.
It gets worse. The results for August were also skewed by a strike against
, which subtracted an additional 85,000 workers from payrolls. Meaning that the rest of the economy created 138,000 new jobs.
The Verizon workers came back in September, so to arrive at an idea of how many new jobs the economy created, you'll have to subtract them out.
Assuming that economists are working with similar assumptions about the numbers of workers laid off by the Census (about 30,000) and added back by Verizon (about 85,000), they're looking for a net pace of job creation of about 175,000.
This would represent a continuation of the trend that's been in place since the spring: a gradual slowdown, affirming that the
Fed's interest-rate hikes over the last 15 months are having their desired effect. Private-sector job growth averaged 202,000 last year, and it averaged 186,000 during the first six months of this year.
Reasons to expect that, according to economists at
Salomon Smith Barney
, include the steep falloff in help-wanted advertising, as measured by the
), and the increase in
initial jobless claims
On the other hand, Henry Willmore, economist at
, observes that the slower pace of job growth over the summer was strange in that it was not preceded by slowing consumer spending or dropping consumer confidence. "The fact that this sequence has not been seen this year makes us suspect that some of the apparent slowdown in job growth is a fluke," he wrote. Willmore believes that "the employment data over the next two months
will lead to a reassessment of the market's currently complacent view that the Fed is done tightening for this cycle."
Even if job growth does continue to slow, it doesn't necessarily make a difference to the Fed unless the unemployment rate and its cousin, the
augmented unemployment rate, start to creep up, Willmore says. The
Federal Open Market Committee has made abundantly clear in its
statements that it wants to see lower levels of labor-force utilization before it puts the gun down. That means payroll growth has to stop exceeding labor-force growth. The labor force -- which consists of the employed and the unemployed -- has been growing at a rate of about 150,000 a month.
But some maintain that slowing job growth
make a difference after all. "I think it does matter, because, thanks to the slowdown in job growth over the last five months or so, we've seen the unemployment rate stabilize," says Christopher Low, chief economist at
First Tennessee Capital Markets
. "Nonfarm payrolls actually lead the unemployment rate."
The unemployment rate, a component of the employment report, was 4.1% in August and is forecast to hold steady at that level in September.
Another risk in the September jobs report, according to Willmore, is that the sharp rise in energy prices over the last several months will come home to roost in the form of a large increase in average hourly earnings. That would ring alarm bells at the Fed because rising wages have the potential to boost prices.
Economists are forecasting a gain of 0.3% on average. Over the last two years, average hourly earnings have increased anywhere from 0.1% to 0.4% a month. "The rise in oil prices has now gone on for long enough that it should begin to have a larger impact on wage settlements," Willmore writes. He's forecasting a 0.4% gain.
Others say that's not likely to happen in a climate of slowing growth. "The pace of job growth does matter," First Tennessee's Low says. "If people feel it's easy to get a job, they'll be more willing to ask for more money."