US NFP Preview: 10 major banks expectations from the November release

As we are closing in on the November month’s release of US Non-Farm Payrolls data, he following are the expectations as forecasted by the economists and researchers of 10 major banks.

This is arguably the one report that could derail a Fed rate hike on December 14. All the 10 major banks expects that the November NFP is likely to print a number in between 160K to 200K while given the steady job gains, the unemployment rate is likely to stay in between 4.8%-4.9% in November.

BMO CM

This is arguably the one report that could derail a Fed rate hike on December 14. Firmer economic growth in the second half of the year, alongside a retracement of job losses related to Hurricane Matthew (the October jobs survey showed the third largest, seasonally-adjusted increase in employees missing work due to bad weather), should lift nonfarm payrolls 190,000 in November. Assuming the labour force continues to swell, the jobless rate will likely hold at 4.9%. Growth in the labour force has snapped back to 1.6% y/y in October, versus 0.4% a year ago, partly because of an upturn in the participation rate of prime-age workers (25 to 54 years old). Labour shortages are lifting wages and pulling discouraged job seekers back into the workforce. Average hourly earnings should increase 2.8% y/y in November, a seven-year high.

Natixis

We expect an acceleration in job creation to 185K in November (from 161K in October). This would be consistent with the 161K increase in private payroll announced by ADP. On the view that the labour participation will recover slightly (up 0.1pp to 62.9%), the unemployment rate should hold steady at 4.9%. We also expect average hourly earnings to increase by 0.2% MoM, up by 2.8% year-onyear (unchanged from October). Q3 GDP (second estimate) is likely to come in for a slight upward revision from 2.9% to 3.0% quarter-on-quarter on an annualised basis.

Goldman Sachs

Forecast nonfarm payroll growth at +200k in November. Previous forecasts at +180k, citing a flow of stronger data so far this week (especially ADP). Cite positive weather effects and "possible residual seasonality." The US unemployment rate seen at 4.8%. Average hourly earnings expected +0.1% on the month (a lot lower than the +0.4% in October). Cite "negative calendar effects" (forecast for y/y is at +2.7%).

Nomura

We forecast that nonfarm payrolls increased by 160k in November, comparable with the gains seen in October. We expect a modest rise of 5k in government payrolls, implying that private payrolls increased by 155k. Elsewhere, with the pace of job gains holding steady and further declines in the insured unemployment rate (continued jobless insurance claimants divided by covered employment), we expect the unemployment rate to decline further to 4.8% in November. On wages, we expect growth in average hourly earnings to slow to 0.1% m-o-m (2.7% y-o-y) following a sharp increase of 0.4% m-o-m in the previous month. We think that the prior month’s strong wage growth was artificially amplified by inclement weather holding down the average weekly hours worked during the survey reference period. To that end, we think that some payback is warranted in November as conditions returned back to normal.

MUFG

Certainly a print way out from the 180k consensus is required to trigger any notable reaction. For what it’s worth our NFP model gives us an estimate of 198k for today and we expect other parts of the report to strengthen the belief that one of the key developments for the economy next year will be accelerating wage growth that continues to help consumer spending. At the margin today’s NFP report should help support the dollar by confirming the recent strengthening of the economy that has been evident in other data of late.

Danske Bank

Despite the moderate headline employment growth of 161,000, the October US jobs report was strong with declines in both the unemployment and underemployment rates and acceleration of wage growth to 2.8% y/y, the highest wage growth since 2009. This should be sufficient 'further evidence' for the FOMC to raise rates on 14 December, which is now also fully priced in by markets. For the November report we estimate non-farm payrolls increased by 170,000 (consensus: 180,000) in line with recent trends and estimate an unchanged unemployment rate at 4.9%. We also expect average hourly earnings increased 0.2% m/m implying an unchanged wage growth rate of 2.8% y/y.

TDS

Nonfarm payroll growth should accelerate in November, underpinning a tightening in labour market conditions. TD looks for a 200k increase in net employment, above the 180k consensus. Job growth should be driven by services and construction while manufacturing employment is unlikely to show any material improvement. The unemployment rate should hold steady at 4.9% (in line with market estimates), though the risks are tilted to the downside. Hourly earnings growth should come in on the weak side at 0.1% m/m (market: 0.2% m/m), though this is largely due to adverse calendar effects

RBC CM

We look for headline and private payrolls to increase by 185k in November. Fundamentals remain sound with initial jobless claims, in particular, drifting down to a fresh all-time (labor force-adjusted) low recently. Note that retail hiring had a very poor showing in October, declining -1k sequentially, and this is inconsistent with holiday hiring trends (which are up slightly vs. last year)—look for this sector to rebound sharply. Consistent with healthy job gains, we look for the unemployment rate to drift down to 4.8%.

Rabobank

US payrolls are expected at 180K, but with ADP tipping an upside surprise that, purely coincidentally, will sit alongside that news that Carrier decided to keep 1,000 jobs in the US after all. However, as always look for the average earnings data.

SocGen

We look for +165k headline payrolls gain with average hourly wages at 2.8% y/y. And another drop in unemployment to 4.8% is possible.

Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls Preview: rate hike priced in, NFP needs to surprise big”