MNI DATA PREVIEW: August Payrolls Seen Steady, Downside Risk

By Brooke Migdon

     WASHINGTON (MNI) - U.S. employment growth is expected to hold steady at

160,000 in August compared with July's 164,000 pace. Low jobless claims and

solid consumer confidence are propping up the labor market while weakness in

services and manufacturing and a global slowdown suggest weaker future hiring.

     Here are key points to watch in Friday's release: 

     -Non-Manufacturing and Services Payrolls Losing Momentum. The final IHS

Markit Services Index slowed to 50.7 in August, signaling softer expansion in

service sector employment. Similarly, the ISM Non-Manufacturing Employment Index

slowed to 53.1 in August from 56.2 in July.

     -Manufacturing Payrolls Likely Soft. IHS Markit's August Manufacturing PMI

registered a final reading of 50.3, the lowest since September 2009. August

factory employment also grew at the slowest rate since March 2017, as reported

by IHS Markit.

     Likewise, the August ISM Manufacturing PMI contracted to 49.1 and half of

the surveyed manufacturing industries reported declines in employment. 

     -Private Sector Employment Slowing. The ADP national employment report

recorded a 195,000 August gain following a 142,000 increase in July. However,

the July number was revised down from an initial 156,000, suggesting private

sector employment may not be as strong. 

     Additionally, the IHS Markit Flash PMI indicated a marked slowdown in

private sector new business in August, and private-sector job creation slowed to

its weakest level since February 2010. 

     -Previous Payroll Data Mixed. Despite a deceptively strong July gain of

165,000 the six-month average for payrolls fell to a seven-year low of 141,000,

suggesting employment is trending down. Average weekly hours worked also

plummeted to a near two-year low in July.

     However, jobless claims figures have been unusually low in recent months,

indicating underlying strength in overall employment. Additionally, the July

unemployment rate of 3.7% remained close to the 3.6% rate seen in April and May

that was the lowest since 1969 and the tight job market lifted y/y hourly

earnings to 3.2% in July from 3.1% in June.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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