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By Brooke Migdon
WASHINGTON (MNI) - U.S. nonfarm payrolls are expected to slow in October,
with a Bloomberg survey median calling for a 85,000 gain following a 136,000
increase in September.
Despite low unemployment and strong consumer spending, job growth this
month will likely reflect weakness in manufacturing -- and increasingly service
jobs -- and slowing global growth.
Unemployment fell to a near five-decade low last month, plunging to 3.5%
from 3.7% in August. However, despite the size of the labor force expanding in
September, the number of unemployed decreased while the number of employed
increased. Jobless claims have also remained low.
Consumer confidence still remains relatively high, despite the Conference
Board's index slipping marginally in October to 125.9 from 126.3 in September.
And Average hourly earnings should increase by 0.3% this month, according to
Bloomberg, after posting a flat reading in September.
But despite positive economic data, weakness in manufacturing and private
payrolls should keep overall October payrolls gains low.
Manufacturing jobs are once again expected to hold down headline
employment. The ISM Manufacturing index, which contracted for a second straight
month in September, is expected to rise to 49.0 in October from the 47.8 level
seen in September, according to Bloomberg. But readings below 50 still signal
contraction, meaning growth should be marginal this month, and likely won't be
enough to bring about a significant rebound in manufacturing payrolls, which
fell by 2,000 in September.
The GM-UAW strike beginning Sept. 15 is also expected to temporarily hold
down manufacturing payrolls this month. The 6-week strike significantly
influenced the number of U.S. workers on strike in October, with net strikers
climbing to 47,700 from 1,700 in September. The GM-UAW strike was not included
in the September strikers data, according to the Bureau of Labor Statistics.
Additionally, despite the IHS Flash Manufacturing PMI reaching its highest
level in six months and the Flash Services index hitting a three-month high, the
employment subindex fell at its sharpest rate since December 2009, with
continued weakness in manufacturing activity likely spilling over into less
vulnerable sectors, such as service jobs.
Private payrolls are also expected to falter this month, with Bloomberg
forecasting an 80,000 gain after a 114,000 increase in September. But the ADP
employment report released Wednesday indicated some potential for a larger gain,
as it showed private payrolls growing by 125,000 in October when markets had
expected a 110,000 gain following September's 135,000 increase.
--MNI London Bureau; tel: +44 203-586-2225; email: email@example.com