MNI DATA PREVIEW: US Oct Payrolls Seen +85k, Earnings +0.3%

By Brooke Migdon

     WASHINGTON (MNI) - U.S. nonfarm payrolls are expected to slow in October,

with a Bloomberg survey median calling for a 85,000 gain following a 136,000

increase in September.

     Despite low unemployment and strong consumer spending, job growth this

month will likely reflect weakness in manufacturing -- and increasingly service

jobs -- and slowing global growth.

     Unemployment fell to a near five-decade low last month, plunging to 3.5%

from 3.7% in August. However, despite the size of the labor force expanding in

September, the number of unemployed decreased while the number of employed

increased. Jobless claims have also remained low.

     --CONFIDENCE LEVELS

     Consumer confidence still remains relatively high, despite the Conference

Board's index slipping marginally in October to 125.9 from 126.3 in September.

And Average hourly earnings should increase by 0.3% this month, according to

Bloomberg, after posting a flat reading in September.

     But despite positive economic data, weakness in manufacturing and private

payrolls should keep overall October payrolls gains low.

     Manufacturing jobs are once again expected to hold down headline

employment. The ISM Manufacturing index, which contracted for a second straight

month in September, is expected to rise to 49.0 in October from the 47.8 level

seen in September, according to Bloomberg. But readings below 50 still signal

contraction, meaning growth should be marginal this month, and likely won't be

enough to bring about a significant rebound in manufacturing payrolls, which

fell by 2,000 in September.

     --STRIKES 

     The GM-UAW strike beginning Sept. 15 is also expected to temporarily hold

down manufacturing payrolls this month. The 6-week strike significantly

influenced the number of U.S. workers on strike in October, with net strikers

climbing to 47,700 from 1,700 in September. The GM-UAW strike was not included

in the September strikers data, according to the Bureau of Labor Statistics. 

     Additionally, despite the IHS Flash Manufacturing PMI reaching its highest

level in six months and the Flash Services index hitting a three-month high, the

employment subindex fell at its sharpest rate since December 2009, with

continued weakness in manufacturing activity likely spilling over into less

vulnerable sectors, such as service jobs. 

     Private payrolls are also expected to falter this month, with Bloomberg

forecasting an 80,000 gain after a 114,000 increase in September. But the ADP

employment report released Wednesday indicated some potential for a larger gain,

as it showed private payrolls growing by 125,000 in October when markets had

expected a 110,000 gain following September's 135,000 increase.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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