CNN
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In October, the initial estimate for the month’s employment gains was a scant 12,000 jobs.
Economists are expecting 17 times that total for November.
When the Bureau of Labor Statistics releases the November jobs report at 8:30 am ET on Friday, it is wholly anticipated that the data will reflect a sharp rebound — a reset, if you will — from an October report that was bogged down and muddied by back-to-back hurricanes and a major labor strike.
When plugging those striking and weather-waylaid workers back in, November’s report is expected to show a net gain of 200,000 jobs, according to consensus estimates on FactSet. The unemployment rate — which has served as an unofficial polestar amid the wild distortions — is expected to remain at 4.1%, where it has been since September.
“We had a report last month [for] which I told my readers, ‘Just throw it away.’ The Bureau of Labor Statistics basically said, ‘You know, we really can’t tell you anything about the effect of the hurricanes,’” Dan North, Allianz Trade’s senior economist for North America, told CNN. “So, what’s going to happen this coming month? Is there going to be a huge bounce back? Well, that would be rational.”
Gus Faucher, senior vice president and chief economist at PNC Financial Services Group, is anticipating job growth of 250,000 positions in November. Such a sharp, upward swing north would indicate underlying payroll growth of about 150,000 jobs per month, he said.
“That’s a good, solid number,” he told CNN. “I think that the labor market continues to do well and is supporting income growth, which allows for consumers to increase their spending.”
Feeding into the confidence that the labor market remains on steady ground — which would make the October report a one-off — is that layoff activity hasn’t spiked and unemployment claims have trended down in recent weeks (after a hurricane-related bump).
“Which suggests that the labor market is still doing quite well,” Faucher said.
The level of job openings nationwide rose to 7.7 million in October from 7.4 million in September, according to the latest Job Openings and Labor Turnover Survey (JOLTS) from the Department of Labor. That beat economists’ expectations of 7.5 million job openings for October, according to consensus estimates from FactSet.
The number of people quitting their jobs rose by 228,000 to 3.3 million in October from September. But, compared to a year ago, the number of quits is down by 308,000. Also, the number of people laid off from jobs declined by 169,000 in October to 1.6 million from September.
The weekly jobless claim data also is telling another story about the labor market: Employers have pulled back on hiring.
The number of continued claims for unemployment benefits, which are filed by people who have received unemployment insurance for at least a week or more, is at the highest level in three years.
“Overall, we still have got a tight labor market and we see that layoffs are historically low right now,” Faucher said. “I think that businesses are reluctant to lay workers off. They’re hiring less, but they’re not laying off. … This is a good time to hold a job.”
Despite the muddied October data, the US labor market activity remains historic: This period of employment expansion is tied for the third-longest in history, BLS data shows.
Still, a clean October report could have gone a long way in providing some clarity about whether the labor market was weakening or picking back up, Claudia Sahm, chief economist at New Century Advisors, told CNN last month.
Weaker-than-expected July and August jobs reports (that subsequently were revised higher) combined with slowing inflation helped spur rate cuts from the Federal Reserve, which had become more attuned to the health of the labor market.
“We continue to be confident that, with an appropriate recalibration of our policy stance, strength in the economy and the labor market can be maintained, with inflation moving sustainably down to 2%,” Fed Chair Jerome Powell said last month.
However, the coming weeks and months could shift the narrative for the labor market, inflation and the overall economy.
President-elect Donald Trump is promising massive tariffs (which economists say could come at a cost to US businesses and consumers) as well as mass deportations and immigration restrictions.
The rebound and subsequent surge in immigration following the pandemic has contributed greatly to monthly job gains.
“Labor supply has been one of the reasons the Fed’s been able to cut to this point,” Brett Ryan, senior US economist at Deutsche Bank, said in an interview. “If that equation changes, it’s another reason not to cut. And our baseline forecast is, we don’t have [the Fed] cutting again after the December meeting. We don’t have them cutting at all next year.”
It’s also possible that October’s 12,000 figure, which was the lowest monthly gain in nearly four years, would be revised upward.
The response rate for the establishment survey — one of two surveys that feed into the monthly employment report — was just 47.4% in October, and the lowest since 1991, BLS data shows. That rate has averaged 65% in the past four years.
Additionally, the BLS did not make any adjustments to its estimation procedures for either the establishment or household survey; so, by letting the numbers speak for themselves, that sets the stage for this meek 12,000-job figure to grow in the coming months.
When it comes to the jobs report, monthly estimates are considered preliminary when first published, because not all respondents report their payroll data in time (and that’s especially true this time; because in moments of crisis, submitting data to the BLS is not a priority for those dealing with the devastation of the storm).
Those survey-based estimates are revised twice further and then held constant until the BLS applies its robust “benchmarking” process to square the estimates with quarterly tax filings.
