Data-Dependent Fed Watching Jobs and Autos

By Robert Hughes

The Fed will no doubt be looking carefully at data for August, including the upcoming Employment Situation report, for signs that recent turmoil in the global economy and capital markets may be affecting U.S. consumer or business behavior. Judging by strong auto sales and the continued low level of layoffs, it would appear that the U.S. is weathering the late summer storm reasonably well.

Auto sales came in at a 17.8 million-unit annualized selling rate for August, the strongest pace in 10 years (Chart 1). Meanwhile, initial claims for unemployment insurance have been hovering in the 265,000 – 285,000 range for several weeks, and have been below the 300,000 level since March (Chart 2).

High on the importance meter, the Bureau of Labor Statistics will release the Employment Situation report for August on Friday. Current consensus on Bloomberg is 211,000, with the estimates covering a range of 175,000 to 254,000. That estimate is right in line with the average monthly job gain since 2011.

Ahead of the government report, ADP today released its estimation of 190,000 new jobs created in August. While this number is slightly below the recent average, it’s still a solid gain.  Add to it some public sector job creation, and the national number from BLS on Friday could easily reach 200,000 (Chart 3).

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Robert Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.