Breaking News
0

U.S. November Payrolls: Has Job Growth Peaked?

By James PicernoMarket OverviewDec 07, 2018 12:42AM ET
www.investing.com/analysis/us-labor-department-payrolls-report-trend-outlook-nov-2018-200365932
U.S. November Payrolls: Has Job Growth Peaked?
By James Picerno   |  Dec 07, 2018 12:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Hiring growth slowed in November among US companies, according to this morning’s update of the ADP Employment Report. Payrolls increased 179,000 last month, down from 225,000 in October. As expected, the annual pace of growth also ticked lower — just barely — although rounding the year-over-year change to one digit leaves the year-over-year trend at a healthy 2.0% for a second month – the fastest rise in over two years.

“Job growth is strong, but has likely peaked,” says Mark Zandi, chief economist of Moody’s Analytics, which co-produces the numbers with ADP (NASDAQ:ADP).

“This month’s report is free of significant weather effects and suggests slowing underlying job creation. With very tight labor markets, and record unfilled positions, businesses will have an increasingly tough time adding to payrolls.”

A fractionally softer year-over-year trend in private payrolls is expected in today’s estimate from the Labor Department (echoing the outlook for US GDP growth). The Capital Spectator’s point forecast for the one-year change in the government’s payrolls report for November (scheduled for release on Friday, Dec. 7) is 1.9%, down slightly from October’s 2.0% rise – a gain that matches September’s annual increase. The back-to-back advances in the last two updates mark the strongest year-over-year gains in two years, but that trend appears set to wilt, albeit fractionally in November.

Although the projected downshift in the annual trend for payrolls is expected to be measured, Zandi’s observation that employment growth has peaked appears set for confirmation in the published figures in the December update and beyond.

Labor Dept. Private Sector Payrolls 1 Year
Labor Dept. Private Sector Payrolls 1 Year

The projections are based on averaging forecasts from eight models, each using a different methodology and offer a different set of pros and cons. Numerous studies over the years advise that combining forecasts from different models generally improves the accuracy of the estimates relative to the projections from any one model. (For an example of the literature on the topic, see this summary.) Here’s a summary of the eight models used to generate the forecasts above. Seven of the models use univariate methods – analyzing the indicator under scrutiny in isolation – while the eighth model draws on multiple indicators. All the analytics are generated in R.

Exponential smoothing state space model: the average forecast is used from 100 simulations based on bootstrap aggregating via the forecasting package. The data set is the historical record for the target indicator.

Autoregressive integrated moving average model: the average forecast is used from 100 simulations based on bootstrap aggregating via the forecasting package. The data set is the historical record for the target indicator.

Neural network model: the average forecast is used from 100 simulations via the forecasting package. The data set is the historical record for the target indicator.

Naïve model: this forecast simply extracts the last data point and assumes that it will prevail for the next 12 months.

Cubic Spline model: a local linear forecasts using cubic smoothing splines via the forecasting package. The data set is the historical record for the target indicator.

Facebook’s Prophet forecasting tool. The data set is the historical record for the target indicator.

Theta method forecast model: the methodology is a simple exponential smoothing with drift via the forecasting package.

Vector autoregression model: this multivariate methodology (via the vars package) uses the following datasets:

U.S. November Payrolls: Has Job Growth Peaked?
 

Related Articles

U.S. November Payrolls: Has Job Growth Peaked?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email