TrimTabs Cautious on Jobs Growth Ahead of Unemployment Report
The markets may have been closed for two trading days this week due to the hurricane, but key economic data is still likely to be released this week from the Labor Department's read on October's unemployment and jobs. Each month we get a report from TrimTabs that aims to front-run or project job gains ahead of the formal report, and the projection from this group is that the economy added some 140,000 jobs in the month of October. TrimTabs is also saying that the BLS employment estimates lag the real-time economic data.
Some 140,000 being projected by TrimTabs is down from its estimates of 210,000 new jobs in September, as well as down from 185,000 jobs in August. Still, TrimTabs said that it expects the U.S. Bureau of Labor Statistics to report that job growth improved in October compared to its estimate of 114,000 new jobs created in September.
As far as how this 140,000 compares to the actual nonfarm payrolls from the BLS this Friday, Bloomberg has estimates of 125,000 for October after the 114,000 gained in September. Dow Jones also is looking for a gain of 125,000 in payrolls.
Our real-time data is now showing a deceleration in job growth following a temporary jump in growth this past summer. In our opinion, the current slowdown is due to uncertainty surrounding massive tax increases, expiring stimulus measures, and possible budget cuts scheduled to hit the economy January 1.
Today's employment estimates are based on an analysis of real-time daily income tax deposits to the U.S. Treasury from all salaried U.S. employees, which TrimTabs said is historically more accurate than initial estimates from the BLS. TrimTabs also said that the BLS survey methodology missed the job-growth pop in August and September and that the BLS October estimate also will likely miss the current slowdown in economic growth.
TrimTabs observed a four-month acceleration in year-over-year growth in real-time daily income tax withholdings from June through September. It said:
The company attributed the acceleration to an increase in economic activity in interest-rate-sensitive sectors such as housing, mortgage refinancing, and automotive. The increase in economic activity, in turn, led to an increase in jobs. TrimTabs reports that growth has slowed since the beginning of October, suggesting the summer economic growth drivers were seasonal.
In the past four weeks, growth in withholdings slowed to 3.4% year over year, down from 5.1% in September and 4.6% in Q3 2012. The report assumes October inflation of 2%, showing that real growth in the past four weeks was only 1.4% versus 3.1% in September.
JON C. OGG
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