Can the system take any more drastic indicators?
Goldman Sachs has cut its forecast for tomorrow’s closely watched US payroll numbers to -300,000 in October. That would be the fourth sharpest decline in 20 years, and steeper than any during the 1990s’ recession. The bank keeps its view for the unemployment rate unchanged at 6.4 per cent, still up 0.3 per cent from September.
The justification for their revision:
The downward revision is based on a string of very weak data releases since we cut our forecast that point toward more severe job losses in October than we originally thought. Specifically, perceptions of job availability, the employment subindexes of both the nonmanufacturing and manufacturing ISM surveys and the ADP employment report all came in well below our expectations.
Regarding those ADP Employer Services figures, which monitor jobs in the private sector - the report recorded a larger-than-expected 157,000 jobs cut in October. It also revised its gauge of jobs lost in September to 26,000 versus an original 8,000. The October losses were the deepest job cuts in six years. According to ADP the areas affected were:
This month’s employment loss was driven by the goods-producing sector which declined 126,000 during October, its twenty-third consecutive monthly decline. The manufacturing sector marked its twenty-sixth consecutive monthly decline, losing 85,000 jobs. These losses were
compounded by an employment decline in the service-providing sector of the economy which fell by 31,000, the first loss in the service-providing sector recorded by the ADP Report since
November of 2002.
The Reuters consensus, meanwhile, for tomorrow’s payrolls is -200,000. If delivered, that would be the largest monthly cut in jobs since March 2003.
While we await that number, here are some nice charts on weekly unemployment claim figures from Calculated Risk:
Related links
104,034 investment banking jobs – FT Alphaville