The September’s unemployment report is expected to show continued deterioration in the labor market.
Even worse, the report will not even reflect most of the economic trauma seen in the latter half of September since most of the September unemployment survey data had already been collected by then. Since the unemployment data is a lagging indicator for the business cycle, the unemployment data is likely to get particularly ugly in the fourth quarter.
The Sep non-farm payroll report is expected to show a decline of -105,000, which would be the largest payroll decline seen yet in this cycle and the first decline of more than 100,000 jobs since 2003. Payrolls have so far fallen every month this year and have fallen by a total of 605,000 jobs so far this year. Meanwhile, the consensus expectation is that the Sep unemployment rate will remain unchanged from August’s 5-year high of 6.1%.
However, with the ongoing hit to the economy from the credit crisis, there is little doubt that the US unemployment rate very soon will rise above the 6.4% peak seen in June 2003 during the last economic bust.
In fact, the way things are going, the US economy would be lucky to avoid a challenge next year to the 24-year peak for the unemployment rate of 7.8% seen during the 1991 recession.
