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By Jason Stipp and Robert Johnson, CFA | 11-06-2013 12:00 PM

Slow Job Growth Will Stick Around

Category by category, it's hard to find any signs of breakout job growth acceleration, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar. We'll get the government's employment report for the month of October on Friday, and here to set the stage for that report is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: September [employment] data was delayed. When it finally came out, it showed only about 150,000 jobs added, which was pretty anemic. ADP data last week for the month of October came in at 130,000 private-sector jobs added, and the consensus for October government data isn't that great, either. So, are we in a really soft spot here? What are you expecting to see for October?

Johnson: I think the number will be soft. Somewhere in the broad range of 120,000 to 140,000 jobs added seems reasonable to me. Certainly, September was a little weak, and then we actually had the government workers not working [in October]. And restaurant workers and services workers that are associated [to government] may also be affected--not the direct [government] employment, but the indirect employment. That could be a factor. That is what the ADP report showed, and I think that's what we'll probably get when we see the number on Friday.

Stipp: We can get some clues from reports that we've already seen, and one of those is [the] Challenger Gray [report], and it showed that we did see an uptick in layoffs?

Johnson: Yes. That's an interesting measure, and that certainly didn't show much improvement. In fact, it got a little bit worse month-to-month [in October], so that would suggest we are not going to be much different than the 148,000 we saw in September looking into October.

And the other [report] we all like to look at usually is initial unemployment claims, but that data has been badly mangled by California processing errors that made the number dip really badly in September and now are making it look artificially high in October. But still, I don't think we've seen any improvement on that data between September and October when you adjust for the California effect.

It suggests that whatever we saw in September is probably what we saw in October, plus we'll lose a little bit for the ancillary jobs related to government people not working. That's how I get from 148,000 [jobs added in September] to something that looks more like 120,000 to 130,000 [jobs added in October].

Stipp: Let's talk about how that government shutdown will affect the data, because there will be some interesting impacts.

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