Jobs Outlook Remains Tepid
This week’s economic data has come in broadly as expected, leaving the forecasters at Moody’s Analytics to continue to forecast that job growth will be slower in August — but still faster than it was in the spring. The latest post on Moody’s Dismal Scientist blog explains:
Labor market data over the past week confirm that August has been a sluggish month for job creation. We still look for a 145,000 increase in nonfarm payrolls, not far from July’s 163,000 gain and above the second quarter average of 73,000. The unemployment rate likely edged down to 8.2% this month from July’s 8.3%. While improving slowly, the U.S. job market is generating little wage income growth, which will be felt as rising gasoline and food prices test consumers’ resilience.
The Moody’s assessment, however, goes on to cite “reasons for concern that the August numbers could undershoot our forecast,” including a rise in the four-week moving average of continuing claims for unemployment benefits, aweakening index of consumer confidence and a region-by-region Fed report (known as the beige book) that was “not upbeat about the health of the job market.” It adds:
Each employment report is important, but this month’s will be especially so, as it comes as the Fed considers new round of quantitative easing. If the numbers are notably weaker than expected, the odds of near-term Fed action will rise.
Moody’s projections continue to indicate that the presidential election will remain close. As we’ve written previously, history suggests that average job gains between 100,000 and 175,000 in the six months before an election tend to lead to a close race.
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