Time and a Half: US employment report preview

Summary

The final Employment Situation report of the year will be a unique one. On Tuesday, December 16, the Bureau of Labor Statistics will release the shutdown-delayed November jobs report. Published with it will be the establishment survey half of the October jobs report, including nonfarm payrolls and average hourly earnings. But the October household survey, which includes the unemployment rate, will not be published due to collection issues caused by the government shutdown.

We estimate payroll employment declined by 60K in October, although that will overstate the loss of momentum in job growth. October marked the first month when workers who participated in the federal government's deferred resignation program were no longer on the payroll. When combined with the ongoing federal hiring freeze, we expect federal employment declined by around 125K. The government shutdown itself, however, should not affect federal payrolls since furloughed workers eventually received pay for the survey's reference period.

The November data will provide both a more timely and more complete look at the jobs market. We expect it to show the labor market remains in a tenuous position, with nonfarm payrolls expanding by 45K and the unemployment rate edging up to a cycle high of 4.5%. If realized, we believe it will be increasingly clear that the "maximum employment" side of the Fed's mandate is in jeopardy.

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