Before starting, it’s important to remember that the U.S. employment report presents statistics from two major surveys, the Current Population Survey (CPS; household survey) and the Current Employment Statistics survey (CES; establishment survey). The most important thing is that, according to the BLS, “For both surveys, the data for a given month relate to a particular week or pay period. In the household survey, the reference period is generally the calendar week that contains the 12th day of the month. In the establishment survey, the reference period is the pay period including the 12th, which may or may not correspond directly to the calendar week.”
Using a new set of data, Homebase “indicated a more pronounced decline across their three metrics beginning in the first week of October.” It added that “Northern states in cooler climates saw sharper declines than their southern counterparts.”
Northern states in cooler climates saw sharper declines than their southern counterparts, reinforcing our hypothesis from last month that dropping temperatures will slow down small business activity. pic.twitter.com/PqRVa8V7FU
— homebase_data (@homebase_data) October 30, 2020
Signals from monthly surveys were also disappointing. ADP reported Wednesday that private payrolls increased by just 365k, well below the Bloomberg consensus of 643k, and also below prior figure of 753k in September. In the meantime, although the ISM Manufacturing survey shows the employment component improved in October (53.2 v 49.6 prior), the ISM Services points to some weakness in October (50.1 v 51.8 prior).
The U.S. job market slowed very sharply last month, per @ADP. “Employment growth is continuing to slow and the new wave of virus cases is only likely to exacerbate that trend.” https://t.co/S1N0Y7QfUE via @economics pic.twitter.com/UPxhAeSqOv
— Steve Matthews (@SteveMatthews12) November 4, 2020
Hard data for October also flagged potential for a downward surprise with new auto sales dropping for the first time since April.
🇺🇸 U.S. New Vehicle Sales Fell For The First Time Since April, Flashing GDP Slowdownhttps://t.co/YETG3kW4Eh
— Christophe Barraud🛢 (@C_Barraud) November 5, 2020
Looking at specific factors, in a post, Bill McBride suggested that “Brick and Mortar retailers could be more cautious this year, and retail might decline SA in October.” His analysis looks coherent in a context where the current wave of coronavirus has gained traction since September.
October Employment Preview https://t.co/PetIUullHJ Temp Census hiring will subtract 147K Jobs. Also seasonal retail hiring will be something to look at. pic.twitter.com/s77TD2cDRc
— Bill McBride (@calculatedrisk) November 5, 2020
Finally, the Census Bureau released an update on 2020 Census Paid Temporary Workers, which shows that the employment report will subtract 147,311 temporary jobs.
All in all, it seems that most of indicators (surveys, high frequency and hard data) and technical factors point to a downside surprise for Nonfarm Payrolls (consensus of 585k).
