US labour markets probably warmed up with temperatures in August

Government statisticians are expected to report that US hiring conditions showed "some" further improvement in August. 250K net new positions were created, a touch above the 235K average posted over the May-July span. Several factors support this call for a pickup in payrolls this month. 

"Consistent with a reduction in layoffs during the reference period, the average number of persons filing initial jobless claims contracted by 5K to 272K over the four weeks leading up to the August establishment survey, the lowest tally in three months. Meanwhile, the number of persons collecting unemployment insurance benefits was little changed at 2.27 million between surveys, implying that previously jobless persons continue to find work", says Societe Generale. 

Hiring breadth improved substantially over the June-July period, propelling the BLS' three-month employment diffusion index to 66.7 - the highest reading since April. Normal temperatures, along with unusually low precipitation levels during the first two weeks of the month, should give particular lifts to hiring in the construction, leisure and hospitality industries in August.

The household survey is expected to echo the upbeat payroll canvass. With those finding work (245K) projected to eclipse once again new entrants into the labour force (185K), the civilian unemployment rate likely moved one tick lower to a new cyclical low of 5.2%. 

"The BLS broader U-6 unemployment measure, which includes those marginally attached to the labour force and persons working part-time for economic reasons, probably will follow suit during the reference period, dipping to a seven-year low of 10.3%. Our calculations indicate that the civilian labour force participation rate likely will remain at the nearly four-decade low of 62.6% for a third straight month in August", added Societe Generale.