NFP Preview: Forecasts From Four Major Banks

NFP is set to be released on Friday, November 5 at 12:30 GMT. here are the forecasts by the economists and researchers of four major banks regarding the upcoming employment data

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%.”

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.”

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.”

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)”