Weekly economic review & outlook
Jobs report not as bad as the headline
October 12, 2021
You Need to Know
Week in review
Unemployment rate declines
The unemployment rate dipped below 5.0 percent for the first time since the pandemic began. Labor supply remains an issue, but the job market has regained much more ground than normal at this still-early stage of the cycle.
Semiconductor woes continue to restrain auto sales
Auto sales plummeted to an annualized pace of about 12.2 million units for September. Semiconductors continue to be the major headwind for sales. While this could be the trough, it will take months to get back to a “normal” level.
Another record likely for job openings
Even though total job openings over the last few months far surpassed what has been seen in any other period (data back to 2000), we project a further rise in job openings to a record 11.1 million at the end of August.
A strong gain expected for consumer prices
While underlying inflation pressures have eased a bit, energy price gains are accelerating (and soaring in many other parts of the world). As a result, we project overall consumer price index (CPI) inflation of 0.4 percent for September, which would bring the 12-month trend rate up to 5.4 percent, matching June and July for the highest since 2008.
Strong growth should continue for retail sales
We project growth in total retail sales of 0.3 percent for September, and 1.1 percent for retail sales excluding autos.
Nonfarm payrolls increased by 194,000 for September following a sharply upwardly revised August gain of 366,000. The September increase was significantly less than expected and the surprise came mainly from a decline in government positions, particularly in education. This likely owes, at least somewhat, to seasonal adjustment issues. Other categories suggested a stronger report than the headline number. Trade and transportation, for example, added 120,000 jobs, which should help to relieve some supply chain issues. The leisure and hospitality sector did add 74,000 jobs, but this is less than what was expected. The composition of new hires, as well as fundamental excess demand for workers, helped to push average hourly earnings even higher, now up by 4.6 percent on a year-over-year basis.