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MNI: US Payrolls Preview: Risks Of Upside Unemployment Surprise

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Executive Summary

  • Nonfarm payrolls growth is expected to have firmed marginally to 150k in September although some analysts also look for upward revisions to August.
  • There is a strong cluster of estimates around 150k but with a wider than recent range of views beyond that.
  • The unemployment rate can again have a major role in the market reaction. Consensus sees 4.2% for a second month and whilst claims have proved resilient, we see a real risk that it tilts the other side of 4.25%.
  • Powell has looked to temper expectations of a second 50bp cut but the market still prices 35bp of cuts for the Nov 6-7 FOMC with core PCE inflation recently tracking a little below 2% annualized.
  • A scenario with the u/e rate firmly rounding to 4.3% and payrolls growth of circa 100k could be sufficient for a material step towards pricing in 50bp but the elections on Nov 5 remain a key unknown.
  • Note that there is no expected strike impact with this month’s data but there could be significant disruption for the October report on Nov 1, just a few days ahead of the Nov FOMC. 

PLEASE FIND THE FULL REPORT HERE:

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Executive Summary

  • Nonfarm payrolls growth is expected to have firmed marginally to 150k in September although some analysts also look for upward revisions to August.
  • There is a strong cluster of estimates around 150k but with a wider than recent range of views beyond that.
  • The unemployment rate can again have a major role in the market reaction. Consensus sees 4.2% for a second month and whilst claims have proved resilient, we see a real risk that it tilts the other side of 4.25%.
  • Powell has looked to temper expectations of a second 50bp cut but the market still prices 35bp of cuts for the Nov 6-7 FOMC with core PCE inflation recently tracking a little below 2% annualized.
  • A scenario with the u/e rate firmly rounding to 4.3% and payrolls growth of circa 100k could be sufficient for a material step towards pricing in 50bp but the elections on Nov 5 remain a key unknown.
  • Note that there is no expected strike impact with this month’s data but there could be significant disruption for the October report on Nov 1, just a few days ahead of the Nov FOMC. 

PLEASE FIND THE FULL REPORT HERE:

Keep reading...Show less