US NFP Preview: 7 major banks expectations from November month’s employment report

With the calendar flipping over to November, the all-important nonfarm payrolls report is landing today. As we get closer to the release time, here are the expectations as forecasted by the economists and researchers of 7 major banks regarding the upcoming employment report.

Most of the economists and researchers are expecting November US NFP to post a reading in between 160K to 200K, following the softer-than-expected 134k reading last month. In addition, they expect the US unemployment rate to remain steady at 3.7% range.

Deutsche Bank

With markets faring well into the end of the week, there’s still one more test with today’s payrolls report in the US due up. The market consensus is for a 200k reading following that softer-than-expected 134k last month. Our US economists expect a 185k print, but believe that risks are to the downside due to the hurricane disruptions. Our colleagues expect the unemployment rate to remain steady at 3.7% (with risks it rounds down to 3.6%) while they expect average hourly earnings to rise +0.2% mom and to a new post-crisis high of 3.1% yoy - the highest since early 2009. This represents a jump of almost 40bps from the September reading which is largely due to base effects from October 2017, when earnings plunged after Hurricane Harvey, Irma and Maria boosted September 2017’s print.

Danske Bank

In the US, we get the job reports for October. We estimate non-farm payrolls rose by 190,000 - tightening the labour market and putting upward pressure on wage growth, thus we expect average hourly earnings rose +0.25% m/m, bringing this year's annual growth to 3.2%.

TDS

We expect payrolls to come in on the weak side at 160k (consensus: 190k), this time dampened by Hurricane Michael. The latter should more than offset any rebound from Hurricane Florence, which contributed to the weaker September print, in our view. We expect wages to lend a more upbeat tone to the report and rise 0.3% (consensus: 0.2%), taking the y/y pace to 3.2%. However we see risk for downward revisions. Finally, the unemployment rate should be unchanged at its cycle low of 3.7%.

ING

Our economists expect a strong employment rebound after a weather-depressed September reading caused by Hurricane Florence - and they had even hoped for an even stronger outcome than our 200,000 forecast for payrolls, but note that Hurricane Michael hit Florida the week of October payrolls data collection. In terms of wages, we think the annual rate will move up to 3.2%, which would make the fastest rate of pay growth since April 2009, while the unemployment rate could drop to the lowest since December 1969. While markets are broadly expecting this - any strong US inflationary signs could give US Treasury yields another boost and see global risky assets take a hit. The USD would likely remain bid in this scenario.

Nomura

We expect a solid 175k increase in nonfarm payroll employment during October, consistent with continued labor market strength in an economy operating above potential. We expect average hourly earnings (AHE) to increase 0.2% m-o-m, held down in part by calendar effects. However, base effects are likely to push up the y-o-y rate 0.3pp to 3.1% as the sharp decline in AHE last October drops out of the calculation. After falling 0.2pp in September, we expect the unemployment rate to hold steady at 3.7%.

Westpac

The September employment report again highlighted the susceptibility of nonfarm payrolls to poor weather, the 134k gain for the month well below the 3, 6 and 12-month averages. However, upward revisions to prior months made up for any disappointment. Coming out of hurricane season, the US economy is likely to again print a strong gain for jobs in November, likely in the region of 190k. Risks around revisions are skewed to the upside. For the unemployment rate, recent strength in employment growth points to a holding of the 3.7% level. However, such a result is conditional on unchanged participation. Hourly earnings growth will also remain a focus, with only a modest uptrend in place. To our mind, only when prime-aged participation heals will the wage growth trend accelerate.

Rabobank

The ADP employment report earlier in the week suggests the slight risk of an upside surprise to the headline jobs number of 200K. On that earnings front, consensus is 0.2% m-o-m, which will lift the y-o-y rate to 3.1% from 2.8% due to the magic of base effects. Naturally, anything markedly higher or lower there is going to play out strongly in markets given the Fed’s view that it needs to keep hiking and the counter-argument. Expect room for some serious moves in USD if earnings growth is higher, especially given the sell-off yesterday

Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls preview: wages' growth vs. job's creation, which one will weigh more?”