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     WASHINGTON (MNI) - The median forecast in an MNI survey shows analysts
expect October nonfarm payrolls to rise by 190,000 when they are released on
Friday, a larger gain than the 134,000 increase in September, with a clear risk
of an overestimate. 
     Analysts also expect average hourly earnings to rise 0.2%, the average
workweek to remain at 34.5, and the unemployment rate to hold steady at 3.7%.
The impact of Hurricane Michael, which hit in the middle of the October survey
week, could be seen in this month's report, particularly in average hours and
hourly earnings.
     Ahead of the release on Friday, we outline five themes for particular
     Based on analysts' history, there is a downside risk to the headline value.
In the month of October, analysts have overestimated payrolls 12 times out of
the last 20 years and underestimated eight times, showing a slight tendency to
miss to the high side. When they overestimate, they do so by an average of
42,750 and when they underestimate it is by an average of 83,250. This suggests
that even though overestimates tend to be smaller than underestimates, it is
more likely that analysts will miss to the high side this month. In more recent
years, analysts have missed to the high side six out of the last 10 years.
     Both markets and analysts are expecting average hourly earnings to rise by
0.2% this month. In the last year, markets have been on target for earnings
growth five times and missed seven times, having overestimated four times and
underestimated three times. When they overestimate, it is by an average of
0.18pp and when they underestimate, it is by an average of 0.17pp, indicating
that a miss in either direction this month will be by relatively the same
amount. Analysts have shown a slight tendency to overestimate, having done so
five times, and have underestimated three times. Their overestimates average
0.12pp and their underestimates average 0.13pp, also showing a miss in either
direction tends to be similar in size. With markets and analysts showing no
clear tendency to overestimate or underestimate, there is no clear risk for this
month's average hourly earnings.
     This month, markets are expecting a softer gain than analysts. Markets are
anticipating a 180,000 gain while analysts are forecasting a stronger 190,000
gain. In the last year, both markets and analysts have had an even split between
overestimating and underestimating headline payrolls. Markets have overestimated
by an average of 54,667 while analysts have overestimated by 49,333.
Underestimates for markets and analysts have been smaller, averaging 35,333 and
33,167 respectively. However, based on analysts' tendency to overestimate in the
month of October and a potential drag from the impact of Hurricane Michael,
there is a slight downside risk to this month's report.
     On Wednesday, the ADP Research Institute released their monthly employment
report, which tracks hiring activity by ADP client companies. Although the ADP
report often misses the BLS report, it can give some clues as to the general
direction of employment trends in the US. The report posted an increase of
227,000 private jobs in October, a bit stronger than analysts' estimates of a
190,000 gain for BLS private payrolls. However, the ADP report does not account
for hurricane effects in the same way that the BLS does, as evidenced by the
September data when ADP called for a large private payrolls gain that did not
materialize due to Hurricane Florence.
     For the past 16 years, the ADP report has missed the BLS private industries
payrolls number by an average of 61,000 in absolute terms, overestimating
roughly as often as it underestimates. The fact that ADP reported a strong gain
in October, which was a false signal last month, combined with the analyst
tendency to overestimate October payrolls anyway, further indicates a degree of
downside risk to October payrolls.
     Analyst expectations on the effects of Hurricanes Michael and Florence
appear mixed. Some analysts are expecting a rebound from the September report,
which was softened by Hurricane Florence, while others are expecting the effect
of Hurricane Michael to offset any possible rebound from September. Others still
are expecting that another weak report in October due to Hurricane Michael will
set November payrolls up for an even larger rebound than what would be expected
in October. Some analysts also suggest that average hourly earnings could posted
a larger-than-expected gain in October due to the storms keeping low-wage
hospitality workers at home, particularly in Florida.
--MNI Washington Bureau; +1 202-371-2121; email:
--MNI Washington Bureau; +1 (973) 494-2611; email:
--MNI Washington Bureau; tel: +1 202-371-2121; email: