The US nonfarm payrolls report covering the month of October will be released today, on November 4th, 2016 by the Bureau of Labor Statistics at 12:30 GMT. The consensus estimates for the month of September are as follows:
- Monthly Nonfarm payrolls: 176k
- Unemployment rate: 4.90%
- Average hourly earnings m/m: 0.30%
Previous (August 2016 NFP Report)
- Monthly Nonfarm payrolls: 156k vs. 171k
- Unemployment rate: 5.0% vs. 4.90%
- Average hourly earnings m/m: 0.20% vs. 0.20%
- Average hourly earnings y/y: 2.6%
US Unemployment Rate
In September, the US economy registered 156k jobs, which was lower than the median estimates, according to data from the US Bureau of Labor Statistics. The US unemployment rate also edged higher to 5.0%, after remaining steady at 4.9% for three months.
Despite missing the headline forecast, the US labor market was seen to be strong enough to indicate that the US jobs market was still robust with hiring running at a steady pace. September’s payrolls report showed that more people returned to the labor market, looking for work which was seen by the labor force participation rate which increased to 62.9%. This improvement managed to offset the increase in the unemployment rate.
Wage growth rose at a pace of 0.2% on a month over month basis as expected while rising 2.6% on a year over year basis.
September’s jobs report was broadly flat with nothing to indicate weakness or strength in the labor market.
October ADP Payrolls: 147k vs. 170k
On Wednesday, the ADP private payrolls data showed that private sector hiring in the US rose 147k in October. This was lower than the median forecasts of 170k. ADP private payrolls data for September was revised higher from 154k to 202k. Large enterprises led the way, adding 64k jobs while small businesses lagged, adding 34k jobs during the month. The services sector continued to outperform, adding 165k jobs during the month which managed to offset a decline of 18k in the manufacturing sector.
October 2016 Payrolls Estimates
For October, economists are expecting to see an increase in the payrolls this month, with the unemployment rate seen falling back to 4.9%. Average hourly earnings, however, are expected to rise 0.3% in October, slightly higher than 0.2% increase from the previous month.
Here is a summary of the broad expectations in the run-up to the October 2016 nonfarm payrolls.
CIBC
Royce Mendes from CIBC forecasts that payrolls rose 160k in October and notes that October payrolls “might seem like a disappointment relative to the above 00k pace seen over the past couple of years, but it’s actually quite a healthy number.” Mendes reminds that the US economy needs only 100k jobs per month to keep up with the demographics and therefore expects October NFP to represent “solid progress towards the Fed’s goal of full employment.”
Credit Suisse
Strategists at Credit Suisse expect payrolls to have increased 175k in October while maintaining the general consensus view that the US unemployment rate fell back to 4.9% during the month.
Nordea
Analysts at Nordea remind that the November payrolls will be the first of final two jobs report before the Fed rate hike decision in December. They expect an average NFP print of 175k for October and maintain the view that the US economy needs only 70k – 150k jobs per month to maintain a healthy pace in the labour markets. Nordea analysts expect the US unemployment rate to fall to 4.9% while expecting average hourly earnings to rise 2.6% on a year over year basis for October.
CitiFx
Analysts at CitiFx are of the view the there are “a number of good reasons” for a positive NFP surprise. Taking the bullish case, CitiFx expect a +200k NFP print for October, noting the historical trend of NFP during presidential election years during the month. A rise in job hires in energy and mining sector is also being viewed as bullish for the October payrolls report. CitiFx also cautions that “historically, the September jobs number has had the highest largest upward revision from the initial print.”
