NFP Preview: Forecasts from 11 major banks for September jobs report, the best hint for Fed’s November taper decision

The US Bureau of Labor Statistics (BLS) will release the September jobs report on Friday, October 8 at 12:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 11 major banks regarding the upcoming employment data. The market consensus points to an increase of 488,000 following August's disappointing print of 235,000.

According to FXStreet’s Analyst Joseph Trevisani, Federal Reserve November taper may turn on September payrolls. 

Westpac

“September is likely to see a robust bounce in job creation, we forecast a rise of 600K. However, part of this gain may instead come through revisions to August and July. To end 2022, if payrolls average a gain of around 450K a month then, even with participation returning near its pre-pandemic rate, the unemployment rate will tend to its full employment level. We expect underemployment to also follow this trend, tightening up the labour market and supporting moderate gains in wages hence.”

ING

“With covid cases falling away sharply, we expect September to have seen a re-acceleration to the 450-500K range. Jobs growth is set to improve further in the coming months, given high-frequency data points to a decent uptick in economic activity – such as in restaurant dining, travel and hotel stays.”

TDS

“Signals have been mixed, and large swings in seasonal adjustment factors make forecasting payrolls especially challenging this month, but we expect a pickup relative to the 235K rise in August (which will probably be revised up a bit). Our 525K forecast allows for a 175K rise for government – assuming some normalization in education at the start of the new school year.”

RBC Economics

“US employment is expected to increase 425K, although we look for the unemployment rate to tick up to 5.3% from 5.2% on higher labour force participation.”

NBF

“Hiring may have picked up after a tepid showing in August. While the epidemiological situation was not ideal, it should not have significantly altered job growth as businesses continued trying to fill vacancies. Layoffs for their part, could have gone down a bit, judging from a decrease in initial jobless claims between the August and September reference periods. That said, they have increased 3 consecutive weeks after reaching a low at the beginning of September. All told, payrolls may have increased 540K in the ninth month of the year.”

Deutsche Bank

“We are forecasting a pickup in September, with NFP growing by 400K, and the unemployment rate ticking down to a post-pandemic low of 5.1%. Remember in the weak report last month, yields rose on the day as markets focused on the wage increases rather than the poor headline number.”

SocGen

“Restaurants added 200K workers each month on average in Jan-Jul of 2021, but that stalled in August when restaurant payrolls fell by 41K workers. We look for a gain of 75-100K workers in September. This move could be noisy monthly data, or less fear on COVID-19, as school and other seasonal changes occurred. With the return to growth in restaurants, we see total non-farm payrolls up 470K workers.” 

CIBC

“The return of in-person classrooms should have been the main driver of job growth in September, helping to create 420K jobs in total. However, that likely masked weakness elsewhere as mobility indicators for high-contact services retreated into the survey’s reference week, suggesting a muted impact on hiring from the leisure and hospitality industry despite the end of unemployment benefit top-ups in several states. That would leave the unemployment rate a tick lower at 5.1%, as labor force participation could have risen on the end of jobless benefits. With companies offering higher wages to recruit and fill job vacancies, wages likely rose by 0.3%. We’re slightly below the consensus but not by enough to cause a sustained market reaction.”

Citibank

“Despite total payrolls still 5 million jobs below pre-COVID levels, we do not expect a quick return to the strong +1 million pace of monthly job growth – demand for workers remains solid but there remains uncertainty around labor supply. Our forecast is for a 560K gain. We also expect a somewhat softer 0.3% increase in average hourly earnings while the unemployment rate should fall further to 5.1%. With a limited pool of labor supply, this would limit the size of monthly job growth but also suggest notable downward pressure on the unemployment rate into year-end.”  

JP Morgan 

“We are looking for a 575K gain in jobs. Expect a drop in the US unemployment rate to 5%. The driver for an above-consensus forecast is the expected rebound in the leisure and hospitality sectors.”

Danske Bank

“After the weak August report, focus will be on whether employment growth accelerated after higher benefits expired or whether more deeper running issues (i.e. supply problems or slowing demand?) are holding back jobs growth. In our view, new jobs around 300K or above will be enough for the Fed to go ahead with tapering.”