Jobs Report Forecasts Remain Steady

Jobs Report Forecasts Remain Steady

The Federal Reserve is likely going to raise the interest rates next month. If the labor market continues to act as it has so far, we’re probably looking at an interest rate hike. An unforeseen event that would change the Fed’s plans is unlikely. The jobs report figures remain steady. So far, no news is good news.

Before their meeting in December, Fed officials are going to look at monthly employment records for the past two months. The first one will be ready this Friday. Expectations for the jobs report are for it to show stability.

The Federal Reserve Is Waiting on Signs of Economic Progress

Economists that answered the poll of a prominent newspaper estimated that the nonfarm payrolls for October are going to be at around 173,000. This would be in line with the monthly average for this year. There is the expectation that the unemployment rate has gone down to 4.9 percent.

At the meeting this week the Fed said that it is waiting to see “some further evidence” of economic progress before it decides to raise rates. Just one bad month is probably going to be dismissed by Fed officials as an anomaly. The odds of two bad reports in a row before the Fed’s meeting in December are pretty slim.

The pattern of economic data that we have available so far shows that it is unlikely for the Fed to receive negative results. Over the past three years the data from the Labor Department has been on the same wave length as the predictions of economists. Only on three separate occasions did it fall short of the consensus estimate by 100,000 or more. The most recent one of these three occurrences was in May. For that month only 38,000 jobs were added. The consensus estimate from economists was that 158,000 would be added during the month of May.

Jobs Report Unlikely to Miss Forecasts

The jobs report for May from the Labor Department was disappointing. Many were hoping for the economy to do much better than that. The figures gave reason for negative headlines and negative commentary about the shape the economy was in. But, fortunately, the report for May turned out to be a fluke. Over the following two months of June and July, the labor market added around 217,000 jobs on average.

When it comes to the statistics of the jobs report, the margin of error is actually larger than most people realize. But the odds of two months in a row reflecting just noise are lower. It is possible that two jobs reports for two consecutive months would be weak only due to noise in the labor market. But that is a possibility that only scares professional economists. The last time the jobs report missed the forecasts by over 100,000 jobs for two months back to back was in 2011. That summer the economy was indeed slowing down. But there were no signs of a recession.

With the jobs report form the Labor Department looking steady, the Federal Reserve is likely to raise interest rates at their meeting in December.

Image source: here.