NFP Preview: Forecasts from 10 major banks, the strongest growth in three months

The US Bureau of Labor Statistics (BLS) will release the September jobs report on Friday, November 5 at 12:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming employment data. Investors expect Nonfarm Payrolls to rise by 425,000 in October following the dismal print of 194,000 in September. 

In the view of FXStreet’s Analyst Joseph Trevisani, improving NFP will support the taper, US Treasury rates and the dollar.

Westpac

“October should see a much stronger gain for NFP, circa 500K. Though, like in September, some of the gain could come in the form of revisions to the prior two months. The household survey should also see a strong gain for employment and a decline in the unemployment rate from 4.8% to 4.7% despite a modest lift in participation. Both trends should remain in place in coming months, with full employment expected towards the end of next year.”

ING

“Given the accumulation of savings over the past 18 months, many people may be in no hurry to return to a job that they may not particularly like doing. Consequently, we are conservatively going for payrolls growth of 450K.”

RBC Economics

“US job growth is expected to pick-up in October by 480K following September’s lackluster gain. Employment remains far below pre-pandemic levels, but the unemployment rate – we forecast it at 4.9% – has declined substantially and company reports of labour shortages are widespread.”

Danske Bank

“Labour supply issues remain a key macro theme, and US labour market developments are particularly interesting to watch now that the Fed has started tapering and rate hikes are foreseen next year. With our expectation of a 450K jobs growth in October, we are slightly more optimistic than the consensus (425K)”

Deutsche Bank

“DB expects the headline gain (+400K forecast, consensus +425K vs. +194K previously) to modestly outperform that of private payrolls (+350K vs. +317K) and for the unemployment rate to fall by a tenth to 4.7% and average hourly earnings to post another strong gain (+0.4% vs. +0.6%) amidst still-elevated hours worked (34.8hrs vs. 34.8hrs).”

SocGen

“In our forecast for a 520K job increase in October, the first consideration is a neutral contribution from education. Without such a loss, the September payrolls would have nearly doubled. There are additional items to consider in 4Q and for October in particular. First is the drop in the number of COVID-19 cases, and hopefully along with that, an increased desire to socially engage, go to restaurants and enjoy other types of entertainment and travel. Second, the termination of unemployment benefits in early September should be reflected more in the October payrolls. Some households should have an increased need to return to jobs, and the return is helped as their children are back in schools. We look for the unemployment rate to drop further, even after the surprise 0.4pp drop in September to 4.8%. For October, we expect another 0.2pp drop to 4.6%.” 

TDS

“We forecast a 550K rise in payrolls, even with another start-of-school-year decline in the government sector (after seasonal adjustment); we forecast up 600K for private payrolls. We forecast another relatively strong rise in average hourly earnings: 0.5% MoM, with the 12-month change rising to 5.0% from 4.6%. The pre-COVID trend was around 3% YoY.”

NBF

“Hiring should have continued at a strong pace in the month, as the epidemiological situation allowed the economic re-opening to continue. Layoffs, meanwhile, could have gone down a bit, judging from a decrease in initial jobless claims between the September and October reference periods. All told, payrolls may have increased 350K in the tenth month of the year. The household survey is expected to show a similar gain, a development which could lead to a one-tick decrease of the unemployment rate to 4.7%.” 

CIBC

“485K jobs were likely created in the US in October. Those job gains will have been facilitated by an increase in participation as Delta cases decelerated, while those who lost expanded unemployment benefits in September could have also helped to fill job vacancies. That increase in participation would limit the drop in the unemployment rate, which likely fell by a tick to 4.7%. With businesses offering higher wages to recruit and fill job openings, wages likely rose by 0.4%. We’re above the consensus forecast which could support the greenback and see yields rise.”

Citibank

“US October Nonfarm Payrolls (Citi: 410K, median: 400K, prior: 194K); Unemployment Rate (Citi: 4.6%, median: 4.7%, prior: 4.8%); Average Hourly Earnings MoM (Citi: 0.4%, median: 0.4%, prior: 0.6%); Average Hourly Earnings YoY (Citi: 4.9%, median: 4.9%, prior: 4.6%); Labor Force Participation Rate (prior: 61.6%). NFP increase is stronger than in September but still with downside risks from persistent labour shortages. The relatively quick decline in unemployment rate has been due to both a combination of solid employment gains in the household survey of employment and still-limited participation. The participation rate will be a key data point to watch in coming months to assess the persistence of a tight labour market.”