President Obama may get a boost after his convention speech Thursday night, but will it all be for naught the next morning when the monthly jobs report is released?
Right now, things are looking up for Obama: A pair of fresh reports Thursday suggests that the national jobs statistics for August are likely to turn out brighter than forecast.
Automatic Data Processing, a payroll processing firm that tracks employment, said that by its measure, private-sector employers added 201,000 jobs last month – the biggest gain in five months. ADP has missed big before, so its data shouldn’t be taken as rock solid, but if its estimate is largely confirmed by the Bureau of Labor Statistics on Friday, it would probably give Obama a good post-convention bounce.
The nation hasn’t produced more than 200,000 jobs since February when the labor market looked like it was strengthening, only to fall back in the spring. Between March and June, the economy added just 84,000 private-sector jobs a month on average, according to government figures. In July the job market came back a bit, creating 172,000 net new private-sector jobs.
With the budget-strapped government sector continuing to shed workers, analysts on average are expecting the Bureau of Labor Statistics to report a more modest gain of 125,000 total new jobs for August. If that forecast pans out, it’s likely to neither help nor hurt Obama as much as it would suggest the recovery is continuing on its very slow but more-or-less steady path. The economy needs to create roughly 100,000 jobs a month to absorb new workers entering the labor market and hold the unemployment rate steady, according to Federal Reserve Chairman Ben S. Bernanke.
The ADP report wasn’t the only cheery news on the jobs front. The Labor Department said new claims for jobless benefits fell to 365,000 last week, from a revised 377,000 in the prior week. The latest figure is close to the lowest weekly filings this year, and it suggests job cuts have receded recently.
More significantly for Friday’s jobs report, the initial unemployment claims data in the first part of August also dipped from July levels. And that also bodes well for the official August employment numbers. If companies are laying off fewer workers and hiring more people, the result is bigger net job gains.
Analysts for the most part are expecting the jobless rate for August to remain unchanged at 8.3%. But that’s based on predictions that the economy created 125,000 jobs. If the new job number is closer to 200,000, it’s likely that the unemployment rate dipped in August.
But what happens to the unemployment rate will depend on seasonal adjustments and how many people reported leaving or entering the job market last month. If more people returned to look for jobs, seeing better opportunities, that would put upward pressure on the jobless figure, as the unemployment rate is derived by tallying those with jobs and those without but looking. When jobless people quit searching for work, discouraged or for other reasons, they aren’t counted as unemployed.
Gallup, the polling company, said Thursday that by its measure, the nation’s seasonally unadjusted unemployment rate dipped to 8.1% for August, down from 8.3% measured in mid-August and 8.2% for the month of July. Gallup’s seasonally adjusted jobless rate for August is also 8.1%, but that is a slight uptick from 8% at the end of July.