Hiring at American companies may have slowed as much as 8 percent in September, economists say, as President Trump's trade war pinched manufacturers and Hurricane Florence disrupted business in the southeastern U.S.
The U.S. Labor Department's monthly update, scheduled for Friday, will likely show employers added 184,000 workers, the average of estimates collected by FactSet. That compares with growth of 201,000 a month before.
While the average is still well above the level the Federal Reserve estimates is necessary to maintain stable economic growth, it reflects the escalating risks from the tariffs Trump has imposed on steel, aluminum, and some $250 billion of Chinese imports. The duties have disrupted global supply chains and dramatically increased supply costs for manufacturers, forcing smaller and newer firms out of business.
Factory jobs shrank by 3,000 in August alone, driven by a contraction in states with young businesses, "where we expect tariffs to hit hardest," noted Robert Martin, an economist with Swiss lender UBS. "One month is not conclusive, but the size of the decline is worrisome." He predicts manufacturers added just 7,000 workers in September.
The landfall of Hurricane Florence — which slammed into southern North Carolina with winds of up to 90 mph in mid-September, then drenched the communities in its path with heavy rains that caused widespread flooding — likely shaved 10,000 jobs, Martin estimated.
He predicted growth of just 174,000 positions altogether, with robust gains outside of the manufacturing and retail industries.
There's a chance, however, that the employment picture will look considerably brighter.
Investment bank Morgan Stanley, which had originally predicted gains of just 178,000 in September, raised its estimate to 206,000 after the Institute of Supply Management's non-manufacturing employment index surged during the month to its highest ever.
"Given that the service sector accounts for the majority of employment, this record high reading points to a strong labor market in September," Morgan Stanley economist Ellen Zentner said in a report.
Payroll-processing firm ADP, meanwhile, said private-employer payrolls expanded by 230,000 in a report on Wednesday. Wall Street typically follows ADP's figures closely, viewing them as a potential indicator of the Labor Department's broader assessment.
“The job market continues to power forward," said Mark Zandi, chief economist of Moody’s Analytics. "At the current pace of job creation, unemployment will fall into the low 3 percents by this time next year.”
For now, economists expect the rate to stay roughly flat, at 3.8 percent, matching the lowest since 1969.
[Opinion: A new immigration policy is preventing foreign students from using their skills in the US]