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By Jason Stipp and Robert Johnson, CFA | 09-04-2013 12:00 PM

August Jobs Report: Expect the Unexpected

Several factors could swing the results of this wildcard report, but likely not enough to alter the longer-term slow-growth trend.

Jason Stipp: I'm Jason Stipp for Morningstar.

We get the government employment report for the wildcard month of August on Friday. Here to offer his take on what to expect for that report, as well as how investors may read the number, is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for being here, Bob.

Bob Johnson: Great to be here.

Stipp: The consensus for the August report is right around 170,000 jobs. That would be a little bit better than July, but not quite as good as June. What are you expecting for the top-line number of total jobs added when we get that data on Friday?

Johnson: Just to open up the can of worms about August being a volatile month, I'm going to go with a relatively [low] number, but I want to tell you why. I would say maybe 140,000 looks like a prospect to me.

Restaurant … and retail have been two categories that have really helped the employment report recently. Sales in those two industries have not been so good. I think at some point those two are going to have to re-converge, and I think that may bring the number down a little bit more than people think. Also, August is a tricky month to start with. With that said, I would say my most likely case is a 140,000 job gain.

Stipp: Putting aside some of the disconnect we've seen in restaurant hiring versus some of the business results for restaurants, you mentioned August is a tricky month. It can give us surprise results. Why is that? Why do we see August be more volatile than the other months?

Johnson: Well, it's a big back-to-school month, and exactly when people go back to school and how that falls relative to the week that they measure employment is a really big deal, because when college students go back to school, they leave their summer jobs and [they] aren't replaced. If that happens a few days earlier and it is in one week during one period and another week the other [period], or if there is a gradual trend backward to a different date or forward to a different date, those all impact the number. So, it gets really tricky. The August numbers are very hard to evaluate.

Recall a couple of years ago we actually had a year that [August] was initially reported as no job growth--a flat-out goose egg. So that's why I'm putting a little wiggle room in the number. I am not putting the 140,000 out there because I think the economy is weak, and we're falling apart. …. I'm saying a lot of statistical accidents happen in August, and I want to be cautious.

Stipp: Even if we did get that 140,000, it wouldn't really change the long-term growth trend that you're seeing when you look over a longer time period.

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