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How the end of the GM strike may affect Friday’s jobs report

Scott Gamm

Wall Street is expecting a rebound in Friday’s payrolls report, even with Wednesday’s weaker-than-expected ADP private payroll figures.

The reason? The end of the General Motors (GM) strike, according to Michael Pearce, senior. U.S. economist at Capital Economics.

“The disappointing 67,000 rise in the ADP measure of private payrolls in November poses a downside risk to our forecast that the official non-farm payroll figures due on Friday will show a larger 170,000 gain,” he wrote in a note Wednesday. “But the latter will be boosted by a 50,000 rise in auto sector employment as GM workers return from strike, which did not affect the ADP figures.”

The GM strike, which lasted from mid-September to the end of October, affected October’s employment figures. The economy added only 128,000 jobs, a slowdown from the 180,000 added in September.

General Motors assembly workers picket outside the General Motors Bowling Green plant during the United Auto Workers (UAW) national strike in Bowling Green, Kentucky, U.S., October 10, 2019. REUTERS/Bryan Woolston

The aforementioned Capital Economics forecast of 170,000 represents a rebound from October’s figures. October’s number could be revised higher or lower - those revisions, if any, are included in Friday’s November jobs report from the Bureau of Labor Statistics. 

Still, investors and economists alike process the employment reports closely to gauge not just the health of the labor market, but also the strength of the consumer.

“Overall, this [ADP] report adds to signs that the labor market is still losing momentum, suggesting that incomes growth and thus real consumption growth will slow a little further in the near term,” Pearce wrote. “But it would take a much sharper downturn in employment growth to raise recession fears and prompt the Fed into additional rate cuts.”

The Fed cut interest rates three times in 2019.

Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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