The weak jobs report is just the start - a bigger slowdown is coming in November, economists say
- The US economy added 130,000 nonfarm jobs in August, coming way below expectations of 160,000.
- The weak figures came as a surprise after strong employment and non-manufacturing data this week and Donald Trump tweeting "Really Good Jobs Numbers!"
- Now economists are warning there could be further drops in job growth.
- Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote in a note on Friday a "further slowdown is coming" and was likely to hit in November.
- "Our expectation of sub-100,000 payrolls by late fall suggests the very real possibility that the unemployment rate will start to nudge higher around the turn of the year," he wrote.
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The US economy added 130,000 nonfarm jobs in August, way below the 180,000 expected by Pantheon Macroeconomics. The data came as a surprise after ADP reported strong employment growth, non-manufacturing activity accelerated according to ISM data, and President Donald Trump tweeted "Really Good Job Numbers!" this week.
Pantheon warned that this likely won't be the biggest drop as the firm's surveys "clearly signal much weaker job gains ahead," its economists say.That's because nonfarm payrolls aren't actually fully reflective of the current economy because hiring often lags other trends.
Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote in a note Friday that "a slowdown is coming" and was likely to hit in November.
Another jobs measure, Thursday's ADP report of private companies, showed that hiring in August jumped. President Donald Trump tweeted later that day: "Really Good Jobs Numbers!"
"The headline says nothing about the future-it tends to lag movements in core retail sales, which have surged in recent months - but the employment index, when combined with other survey evidence, tends to lead payrolls by about three months," Shepherdson said.
"Our composite hiring index now points to sub 100,000 payroll gains by November."
For Trump, job growth is one of the key signals that the US economy under his presidency has been doing well, along with a bullish stock market and low unemployment rates.Declining job growth, however, could also affect the unemployment rate.
"The trend rate of growth in the labor force is about 125,000 per month, so our expectation of sub-100,000 payrolls by late fall suggests the very real possibility that the unemployment rate will start to nudge higher around the turn of the year," Shepherdson said.
Shepherdson did add that he expected unemployment to stay low but said had there been no tariff war with China any pressure on that rate would have been alleviated.
"The optics of any sustained increase [of unemployment] will put the administration under further pressure to reverse at least some of the China tariffs," he wrote. "Without the trade war, we'd expect payroll growth to remain close to 200,000, pushing unemployment down."