Economists see modest December US job gains as payroll report nears

The Bureau of Labor Statistics is scheduled to publish the December employment report at 8:30 a.m. ET on Friday, with consensus expectations pointing to a 55,000 increase in payrolls and a decline in the unemployment rate to 4.5%. That would follow November’s 64,000 job gain and 4.6% unemployment rate, leaving investors and policymakers focused on whether hiring remains weak after a six-month stretch averaging 17,000 jobs a month, according to Calculated Risk.

Goldman Sachs expects a stronger payroll reading than the consensus, forecasting a 70,000 increase in December. The bank also expects the unemployment rate to fall to 4.5%, attributing November’s move up to 4.6% largely to furloughed federal workers affected by the government shutdown, according to the forecast cited by Calculated Risk.

BofA also projects a 70,000 rise in nonfarm payrolls, including a 75,000 gain in private-sector employment. The bank cited low initial jobless claims and a decline in continuing claims since October as supportive indicators. It also expects education and health services to remain the main source of payroll growth, while stronger air travel and holiday spending may lift leisure and hospitality employment.

BofA expects the unemployment rate to return to 4.5% after what it described as shutdown-related distortions in November. The bank said the labor market’s weakest phase may have passed, though its payroll estimate still implies modest job creation by historical standards.

Private payroll and survey signals

The ADP employment report showed private employers added 41,000 jobs in December, a figure that came in slightly below consensus expectations. Calculated Risk cautioned that ADP has generally had limited value in predicting the official BLS payroll number.

Survey data offered a mixed picture across industries. The ISM manufacturing employment index rose to 44.9% in December from 44.0% a month earlier. Because ISM employment indexes are diffusion measures based on the share of firms hiring rather than the number of workers added, a reading below 50% points to contraction in manufacturing employment. ADP reported a loss of 5,000 manufacturing jobs in December.

The ISM services employment index moved in the opposite direction, rising to 52.0% from 48.9%. That reading suggests employment gains in the services sector during December.

Claims data point to steady layoffs

Weekly unemployment claims showed little change during the survey reference week, according to Calculated Risk. Initial claims were 224,000 in December, compared with 222,000 in November. The data suggest layoffs were roughly similar in the two months.

Taken together, the ADP report, ISM surveys and unemployment claims point to December job growth broadly in line with November’s outcome, according to Calculated Risk. The site said it would take the over versus the 55,000 consensus estimate, while still characterizing hiring as weak.

This story draws on original reporting from Calculated Risk.