NFP Preview: Forecasts from nine major banks, employment remains fairly healthy

The US Bureau of Labor Statistics (BLS) will release the October employment report on Friday, November 3 at 12:30 GMT, and as we approach release time, here are the forecasts for economists and researchers from nine major banks regarding upcoming employment data.

Nonfarm payrolls are expected to increase by 180,000 in October, compared to a larger-than-expected increase of 336,000 in September. The unemployment rate will remain at 3.8% and the average hourly earnings will fall two tenths to 4.0% year-on-year.

Commerzbank

We expect that 230,000 new jobs will have been created in October, which would be more or less in line with the average for the last six months. From the Fed’s point of view, it would probably still be (too) high. Such an increase would not be a sign that the labor market is tightening and wage pressures are easing. However, given that Fed officials have recently tended to lower expectations for rate hikes despite strong economic data, we would not see this figure as a reason for a rate hike, at least while the Fed’s communication do not change significantly.

Danske Bank

We expect NFP growth to cool back towards the pre-September trend at 180,000, but continue to illustrate strong labor market conditions. Monetary policymakers will closely monitor earnings growth, as well as the third quarter employment cost index, to assess developments in underlying inflation risks.

Deutsche Bank

We expect the general index to be at 140,000 jobs. The unemployment rate at 3.8%.

ING

After the jump of 336,000 in September, the market expects a much weaker result of 175,000 in October. The latest jobless claims figures have suggested that while redundancy remains historically low, the rise in continuation claims points to increasing difficulties in finding a new job. We expect unemployment to remain at 3.8%, but wage growth could slow to 4% year-on-year, marking a post-pandemic low. This should encourage the Fed to think that price pressures are easing and that it does not need to raise interest rates further.

NBF

Hiring could have been subdued for the month if previously released soft indicators such as the S&P Global Composite PMI are any guide. Layoffs, for their part, could have increased slightly judging by a small increase in unemployment benefit applications between the September and October reference periods. With these two trends reinforcing each other, we expect job creation to have slowed to a still decent 175,000 for the month. The household survey could record a similar increase, which would translate into a decrease in the unemployment rate to 3.7%. This forecast is based on a participation rate of 62.8% to 62.7%.

RBC Economics

We expect an increase of 208,000 jobs. However, demand for labor has also slowed in the US, with job openings declining and wage growth slowing. We expect the unemployment rate to rise to 3.9% (despite employment growth) after rising to 3.8% in August and September from 3.5% in July.

SocGen

We estimate an increase of 190,000 jobs in October, which is a reduction of 35,000 due to the increase in strikes.

Citi

We expect NFP to rise by 160,000 in October, albeit with some temporary weakness due to the auto workers strike. Without the effect of the strike, we would estimate a solid increase of 190,000. We also expect a 0.3% month-on-month increase in average hourly earnings in October, although with downside risks to a figure that rounds to 0.2%, and for the unemployment rate to decline slightly to 3.7% in October, although with risks. slightly up from a figure that remains at 3.8%. One issue worth keeping an eye on in the coming months is the recent increase in continuing claims for unemployment benefits.

CIBC

We expect the healthcare and government sectors to maintain their strong hiring pace and deliver a high level of job growth. Despite representing just under 30% of employment, these two sectors have represented 60% of the jobs created since the beginning of the year, that is, an average of 134,000 per month. Other sectors have also shown a greater pace of hiring in recent months, in line with increased demand pressures. The participation rate and unemployment rate should remain unchanged for the month. This week we are slightly above the consensus on employment. Markets will begin to beat the drum for the Fed to tighten further if employment gains return to well above 200K or if there are material revisions from previous months.

Wells Fargo

We expect the pace of hiring to slow in October and expect companies to add 190,000 jobs last month. We expect the unemployment rate to remain stable at 3.8% in October. We also expect wage growth to continue to cool in October. Workforce growth has helped slow wage growth, even though hiring has remained high in recent months. We expect average hourly earnings to rise 0.3% in October, which would translate into the slowest pace of annual wage growth in two years.