Jobs report expected to show rebound from hurricane losses
The October employment report, out this week, is expected to show a strong bounce-back after hurricane-related job losses in September. The payroll survey highlights a busy week of economic news that also features a Federal Reserve meeting and data on consumer spending and confidence, and manufacturing and service sector activity.
Steady job and income growth have led to robust household consumption in recent months. Spending likely picked up further in September as consumers replaced vehicles damaged by Hurricanes Harvey in Texas and Irma in Florida, says Nomura economist Lewis Alexander. Economists estimate the Commerce Department will report Monday that consumer spending jumped 0.8% in September.
On Tuesday, the Conference Board weighs in with its reading of consumer confidence, which often foreshadows spending. The measure has retreated only modestly after reaching a 16-year high in March. It has been bolstered by the strong labor market and gasoline prices that have fallen again after Hurricane Harvey-related refinery closures drove pump costs higher. Economists figure consumer confidence rose modestly in October, approaching its March high-water mark.
The Fed is expected to take a breather at a two-day meeting that ends
Wednesday, leaving its key interest rate unchanged. In June, Fed policymakers raised the rate by a quarter-percentage point. And in September they announced they’ll begin to shrink the Fed’s $4.5 trillion asset portfolio, a move that’s expected to gradually push up long-term rates. Yet the Fed is expected to leave the door open to an anticipated rate hike in December, which would be the third in 2017 amid an improving economy.
A closely watched index of manufacturing activity hit a 13-year high in September, in part because of a strong global economy that’s boosting exports. The measure was also pushed up by longer supply delivery times after the hurricanes, Alexander says, leading to a likely decline in October. As a result, economists expect the Institute for Supply Management (ISM) to announce that its factory index fell slightly this month to a level that still spells a healthy expansion.
The Labor Department releases its closely watched employment report for October on Friday. In September, the economy lost 33,000 jobs as the two storms and related power outages kept workers at home. Economists expect a big rebound in October that accounts for the return of those workers as well as additional hiring. Labor on Friday is expected to report that employers added 310,000 jobs in October.
While manufacturers have been buoyed by strong global economy, the service sector has been underpinned by strong domestic demand. Economists expect that the supply management institute will report that its index of service sector activity slipped this month but still showed robust growth.