We look for the non-farm payrolls to make a decent rebound in September after last month's disappointing report. Our models predict an increase of 250,000 (consensus 205,000). We expect the unemployment rate to stay constant at 6.1% (same as consensus).
There are two main reasons why we look for a robust payroll number: First, most labour market indicators look very strong currently: jobless claim figures are low, the ISM composite employment index is at the highest level since 2005 and the jobs plentiful versus hard to get balance has also continued to rise in the past months. Second, service payrolls have been very low in the past two months despite strong consumer spending and the very high ISM service employment index and we look for a decent rebound here. Part of the rebound will be due to the end of strike activity, which we estimate will pull up the change in payrolls by around 35k relative to the August number. Due to strikes payrolls in the food and beverage industry fell 17k in September versus an average of +5k over the past two years. In October we look for it to increase 18k as workers are back at work.
To Read the Entire Report Please Click on the pdf File Below