Eye on The U.S. Economy: September 2009 Employment Report

The Employment Situation Report comes out on Friday September 4th, 2009 at 8:30 A.M. Based on other reports that came out earlier this week, it may go either way vs. expectations. Consensus estimates an average decline of 200,000 in Nonfarm Payrolls.

Although the ISM Manufacturing Index came out on September 1st at a very strong at 52.9 vs. a Consensus of 50.5, the Inventories Index was weak, suggesting Manufacturers are drawing down existing Inventories, which doesn’t help Employment. but production was up.
From a historical perspective, last month ISM Manufacturing Index had an upside surprise, ADP came in at -371K, Consensus estimates on Nonfarm Payroll were -300K and Actual came in at -247K. So if we see a repeat trend this month, we could actually come better than -200K.

So far I see a couple of positive factors supporting better than expected Employment and one negative factor (ADP).

Here’s the reason I am honing into Employment this month- Personal Income usually lags Employment and leads Consumption, therefore it is logical that Employment trends in September and October could be a major influence on Holiday sales. If you look at the last ten years Retail Sales estimates from the Census Bureau (excluding Auto), the monthly SAAR (Seasonally Adjusted Annual Rate) correlation vs. the Month-over-Month Employment percent change peaks out at a 3-month lag. The correlation with monthly change in Seasonally Adjusted Retail Sales (ex-Auto) peaked at a 2-month lag. Unless we have significant improvement in Employment and Personal Income over the next two months, we are looking at another year of bleak Holiday sales.


  1. 04 Sep, 2009 - 21:59 pm

    Well the Nonfarm Payroll did not come out better than the Consesnus Average of -200K, but slightly worse at -216K (given how these get restated, for all that's the same as expectation).What this means is that consumption isn't picking up any time soon and businesses depending upon the Holiday demand spike to meet their revenue goals need to start bracing for a disappointing Holiday season. An October Employment pick up could still turn things around for the Holiday season, but at this point it seems less likely.

  2. 11 Nov, 2009 - 10:45 am

    I found the number of persons working part time for economic reasons was little changed in October at 9.3 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. My one of cousin has to face the same problem in U.S. this year.


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