US employment report preview - Nomura

Analysts at Nomura offered their preview for the nonfarm payrolls report.

Key Quotes:

"Employment report: The effects of Hurricanes Harvey and Irma introduce a large amount of uncertainty to our September payrolls forecast.

We expect nonfarm payroll employment to increase 50k, with a 45k increase in private payroll and 5k from the government. However, there are significant upside and downside risks to these forecasts depending on how employment, especially in Florida, was affected during the survey week.

More important, despite the print this Friday, the underlying pace of the labour market remains strong and any weakness in September will likely be transitory. We forecast an above-average 0.4% m-o-m increase in average hourly earnings (AHE).

A calendar quirk and a likely reduction in working hours (due to the hurricanes) contribute to the large expected increase. We expect modest wage growth, much lower than in 2007 when the unemployment rate was at similar levels.

Due to differences in definitions between the establishment and household surveys, we expect the hurricanes to exert a less pronounced effect for the measures from the household survey. We expect the unemployment rate to be unchanged at 4.4% (4.380%) and the labour force participation rate to remain near the levels that have persisted over the past several years."