US employment to remain weak in September despite QE3

Following another weak US NFP number in August, market experts' outlook for US employment in the second half of 2012 has deteriorated. The effects of the third round of quantitative easing, introduced by the Fed last month, will be seen not earlier than by the end of the year so for September the analysts expect a result in the range of 80000-130000 jobs added.


Alberto Muñoz and Valeria Bednarik believe that on Friday we will see growth in employment similar to that registered in August, below 100.000, while Adam Narczewski and Yohay Elam point to gains in the range of 80000 -120000. Others see an increase in hiring above 100.000, but still not higher than 130.000.

Most of the analysts polled for the special forecast report agree with Steve Ruffley that "the additional stimulus that the Federal Reserve has recently announced will play no part until later in the year." Alberto Muñoz even believes that QE3 "won't have any effect until 6 months later, around March 2013" while Yohay Elam suggests that "even if the US economy picks up in a few months, it will have more to do with exiting the long and painful deleveraging process than QE3."

Generally, we should not expect "a big improvement in the reading for September," convinces Adam Narczewski. According to the consensus forecast, the unemployment rate will most probably remain at 8.1% or tick up slightly to 8.2%. Only Valeria Bednarik projects an increase to 8.3% - 8.5%, because in her opinion the latest US data points to a serious slowdown in recovery.

US NFP September numbers will be released on October 5 at 12:30 GMT. Below you will find full commentaries of the contributing analysts.

Steve Ruffley - Analyst at

"The ongoing jobs rollercoaster appears to show no signs of fading in the U.S. with last month’s figures another disappointment after the elation of July's 163K. This month will the trend continue? Will we see another disappointing figure or will employment bounce back yet again?
One thing is for sure though. The additional stimulus that the Federal Reserve has recently announced will play no part until later in the year, if at all. Given this, we expect the headline number this month to hover around 110K and although the employment rate may edge up slightly, we envisage it staying in the 8.1%-8.2% region."

Adam Narczewski - Financial Analyst at X-Trade Brokers, XTB:

"It does not seem that QE has a big effect on the labor market and I do not expect a big improvement in the reading for September. QE is having a bigger effect on the housing market which can be already seen. The problem is that the U.S housing market was in such a big recession, that reviving demand leads now to the sellout of previously unsold homes, and not to the improvement of the housing market itself, which in turn would have a greater effect on the labor market. So at this point of time, NFP should remain rather stable and I expect a reading in the 80-120K range."

Yohay Elam - Analyst at Forex Crunch:

"Another unexciting gain in jobs is likely: between 80K to 120K. Not much has changed: housing continues to lead and manufacturing continues to lag. The services sector is somewhere in the middle. The new QE program is also supposed to create a wealth effect: higher house and stock prices will supposedly make consumers more confident and make the spend more. At least for the time being, the impact of this hopeful effect on jobs is very questionable. 
Even if the US economy picks up in a few months, it will have more to do with exiting the long and painful deleveraging process than QE3. The unemployment rate will likely stay around 8.1-8.2%. This indicator becomes less important after Bernanke discussed the more general picture of unemployment, which includes the participation rate."

Alexandra Estiot - Senior Economist at BNP Paribas:

"An acceleration of job creations is unlikely to happen in the second half of this year. Regarding both investment and hiring decisions, the business sector will keep on the wait-and-see mood, as long as they do not have a clearer idea of the way the fiscal cliff is to be avoided. The fiscal outlook is blurred. There is no doubt that federal authorities will not the fiscal budget to adjust by 5 percentage points next year. Whether this will be achieved through no cut in spending or no hike in taxes will depend on the outcome of November 6th elections. If the President and the Congress’ majority are from the same party, the solution will appear fast, allowing a rebound as from December. More mixed results would leave uncertainties until earl-2013. This is why we do not expect the labour market to rebound before the turn of the year. As bold as it was, the recent decision from the Fed to launch an open-end open-amount QE will not help in the short term. It could however exacerbate the rebound in activity when the fiscal issue is resolved, allowing the unemployment rate to finally follow a sustained downward path. For September, we do expect non-farm payrolls to increase by just 110-130k, as the manufacturing sector probably shed some more jobs."

Talal Abdullah - Financial Analyst at

"It's obvious now that the labor market is still 'far from normal', where conditions in the labor market remained challenging throughout the past months according to the NFP report. I believe that the non-farm payrolls report for the month of September will show "moderate" improvement, after the FOMC decided to indulge in quantitative easing recently to help the economy reiterating lingering weakness eyed in the market.
If truth be told, I believe that the Non-farm Payrolls will show another month of 'moderate' jobs growth, before the jobs market starts to show good and strong performance in the coming few months.
In September the economy probably added between 100,000 – 130,000 jobs, compared to the mediocre 96,000 jobs added back in August, while it’s likely that the unemployment held steady at 8.1% and not surprising if it bounces back to 8.2%."

Ilian Yotov - FX Strategist and Founder at AllThingsForex:

"Now that we know that the Fed and the European Central Bank are willing to commit to open-ended quantitative easing, things will get back down to economic conditions around the globe when trying to discover the appropriate levels for the USD exchange rate against other currencies. The greenback could benefit if the U.S. economy demonstrates resilience in the face of a global slowdown. We could witness a month of better job creation with the U.S. economy expected to add up to 110K jobs in September, compared with 96K in August, while the unemployment rate remains at 8.1%."

Bill Hubard - Chief Economist at

"The jobless claims report on September 20th was significantly worse-than-expected for a second week, pointing to no underlying improvement in labour market conditions since the weak August employment report. Initial claims in the week of September 8th were revised up to an 18,000 increase to 385,000, and there was only a 3,000 pullback in the week of September 15th – the survey week for the employment report – to 382,000. The 4-week moving average rose 2,000 to 377,750, highest since the end of June and up from 368,750 in the August survey week. Therefore, our initial forecast is for a 125,000 gain in non-farm payrolls in September and a 0.1% rise in the unemployment rate to 8.2%."

Alberto Muñoz - Forex Analyst at

"New stimulus measures introduced by the Fed in September won't have any effect until 6 months later, around March 2013 so we shouldn't expect a significant change in current labor market conditions. Probably Non Farm Payrolls will be slightly below 100K and the Unemployment Rate will keep unchanged at 8.1%. If the Unemployment Rate falls below 8.0% that won't be a positive number as it would be indicating that there are fewer people looking for a job (and not that there is jobs creation) so the market would put in risk off mode and equities and commodities would fall as well as a strong rally in the greenback."

Valeria Bednarik - Chief Analyst with

"QE3 has come in timely manner, as US latest data showed is not just a slow recovery, but risk to the downside remains high. GDP contraction to 1.3% was a big disappointing surprise. Weekly unemployment claims have shown an upward tone most of this September, among other disappointing employment figures that point for a not so positive NFP readings.  I’m expecting a number of no more than 80K for this month, while unemployment rate will likely come out in the 8.3% - 8.5% region."
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