Not a lot of news in the Housing Market over the past week but we did receive some very important Labor Market data. The Bureau of Labor Statistics (BLS) delivered its Jobs Report and the ADP Employment Report offered some insight into private sector payrolls but the question is - what do these numbers say about the likelihood of a recession? Let's take a look.
As you may recall, the BLS Jobs Report contains two surveys: the Business Survey, which provides the headline jobs number, and the Household Survey, which provides the Unemployment Rate.
The Household Survey showed there were 204,000 job creations while the labor force decreased by 57,000. This drop in the labor force contributed to the decline in the unemployment rate, which means the decline wasn’t just due to strong job growth. In fact, the BLS reported the smallest monthly job gain in six months, of which, nearly all gains came from individuals 45 or older.
The U-6 All-In Unemployment Rate, which accounts for people who "want a job" but have not looked in the past 4 weeks, fell from 7% to 6.7%. The decrease in the unemployment rate triggered a selloff of stocks and bonds last Friday because this data gives the Federal Reserve the green light to continue hiking rates.
The ADP Employment Report came in above just expectations for September with 208,000 jobs created. The spread was pretty even across small, mid, and large-sized businesses. All of the gains were made by service providers, whereas goods producers suffered losses.
While the September employment data looks positive, we received a telling piece of news comes from KPMG Global's CEO Outlook Survey. The survey consisted of information provided by over 1,300 CEOs in some of the world's largest companies. Of the 1,300 executives, 86% expect a recession over the next year, 39% have already begun freezing corporate hiring, and 46% plan to include downsizing in their considerations for the next six months.
Overall, we received some mixed messages. This week, the markets will be anticipating the September inflation data. Stay tuned for the breakdown next week.
