Everybody is going to focus on jobs and the economy tomorrow when the August employment report is published at 8:30 in the morning. The consensus number for non-farm payrolls is 75,000, but all I can say is, don’t bet on it. Monthly job forecasts are one big crapshoot.
There’s roughly 160 million people working in America. So, if you miss your forecast by only one-tenth of 1%, it’s a 160,000 miss. So, on that basis, jobs could run as high as 235,000. Or jobs could fall by 85,000 based on the 75,000 consensus. Plus, we’ve seen big downward revisions in recent months, and it’s quite possible there may be more of these on the way. We have a new man at the BLS, EJ Antoni, a great friend and a very smart fellow. But he’s not going to be able to make any real improvements for quite some time.
Today, the August Automatic Data Processing (ADP) private sector jobs report came in light at 54,000, but there’s no real correlation between that number and the BLS number. Earlier this week we had a JOLTS number that came in light at 7.18 million (JOLTS stands for Job Openings and Labor Turnover Survey). For the first time since April 2021, the level of job openings was slightly less than the number of unemployed, which is 7.2 million. So, it’s a slight differential but probably, along with other labor market indicators, suggests a softening in the jobs picture.
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It’s not a major downturn. The unemployment rate is still a low 4.2%. Weekly unemployment claims are showing a solid and stable labor market. Probably the worst number out there is the ISM Manufacturing Index, which continues under 50%, as it has been for several years. ISM services, however, came in stronger than expected today at 52%. Another good number is the business investment, called non-defense capital goods excluding aircraft, where orders are up over 10% at an annual rate and shipments over 6% for the past 3-months.
In some sense, Mr. Trump’s economic and trade policies are aimed at producing new factories, and it looks like the newly expected buildout is well on its way. Especially with 100% depreciation write-offs. And here’s an unbelievably spectacular number: non-financial corporate sector productivity over the past four quarters is up 3.4%. And for the past quarter alone productivity is up 5.7% at an annual rate. All this before Mr. Trump’s “One Big, Beautiful Bill” hasn’t really gone into effect.
And now it’s being called the “Working Families Tax Cut Bill”. And real wages are already rising. And today, CEA Chair Stephen Miran says there’s no tariff inflation. So, whatever happens with tomorrow’s job report, the economy is doing better than you think.
