What Economists Are Saying Ahead of the August U.S. Jobs Report

(Bloomberg) -- America’s labor market continues to run hot, even if wages remain cool. Economic data point to a positive feedback loop, boosted by tax cuts, that’s kept hiring strong: consumers are more optimistic and spending more on goods and services, and thus propelling companies and factories to add more people to cope with increased demand.

It’s kept the Federal Reserve on a path of gradual interest-rate hikes. The question is how long employers can sustain the current pace of hiring as the pool of workers shrinks and risks litter the road ahead, including emerging-market turmoil and a widening trade war.

Here’s what some economists expect from the August jobs report, from low to high estimates on non-farm payrolls. The median projections are for a job gain of 191,000 and a drop in the unemployment rate to 3.8 percent.

Glassdoor (163,000)

“Despite a rising pace of inflation, a looming trade war that threatens to slow U.S. exports, and tightening monetary policy by Fed policy makers, hiring by employers today shows little sign of slowing,” Andrew Chamberlain, chief economist at the job-search and company-review website, said in an email. “All signs today point to an August jobs report that’s likely to bring more good news for American workers.”

Bloomberg Economics (180,000)

Economists Carl Riccadonna, Yelena Shulyatyeva and Tim Mahedy noted that the first reading of August payrolls “has fallen short of both the consensus estimate and the prevailing trend with impressive consistency for much of the current economic cycle.”

“Analysts should beware of an August mirage in payroll weakness,” they wrote. “The optics will be particularly jarring on the heels of a below-trend July reading. While it may prove tempting to connect the two months as a signal of deteriorating labor-market conditions, Bloomberg Economics does not subscribe to such a view.”

Scotiabank (180,000)

“If August is within the realm of typical Augusts when it comes to seasonal wage gains, then when combined with year-ago base effects we could well see an acceleration of wage growth,” said senior economist Derek Holt.

Average hourly earnings are forecast to rise 2.7 percent from a year earlier, according to the median estimate of analysts in a Bloomberg survey. That would be identical to gains in June and July, with the pace failing to break above 2.8 percent in this expansion despite the low unemployment rate.

Morgan Stanley (194,000)

Several indicators point to solid hiring, according to analysts led by Ellen Zentner, chief U.S. economist. The four-week average of jobless claims “comes right near the record low for the series,” they wrote in a note to clients, “signaling that firing flows remain low and should remain supportive of net job growth.” Consumer sentiment indicates Americans are feeling confident about the labor market, and purchasing managers’ indexes offer “further positive indications.”

ING Bank (210,000)

According to Chief International Economist James Knightley, the August reading will likely get a natural bump following July employment numbers that were dragged down by mass layoffs at Toys “R” Us, the now-bankrupt retail chain.

“After a disappointing July report, we expect normal service to resume with a rebound in payrolls and a pick-up in pay, which should cement expectations of a September rate hike,” he said in a note to clients.

©2018 Bloomberg L.P.