What to Expect From the October Jobs Report
The October jobs report will be released Friday morning. Here's what we expect the data to show.
"The jobless rate is lower than a year ago, and payroll growth is noticeably above last year's pace," Federal Reserve Chair Kevin Warsh said during his press conference following the October Fed meeting. In addition to a jobless rate of 4.2%, Warsh cited a four-week moving average for unemployment insurance claims that continues to run at the lowest level in generations. "So, on the employment side of the Fed's dual mandate, conditions are quite positive," Warsh concluded.
That's despite a cooler-than-expected September jobs report, at a time when "there is a lot happening" and "the world is quite unsettled," as Warsh observed at last month's meeting.
The U.S. added 29,000 new jobs in September, well below a consensus forecast of 93,000. At the same time, job growth for July (-31,000 to -10,000) and August (-29,000 to +133,000) was revised down, resulting in a combined 60,000 fewer jobs than previously reported.
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The unemployment rate, which is derived from a separate survey, took an unexpected uptick to 4.2% from 4.1%.
So what does this mean for October? We'll find out on Friday morning when the monthly data is released. But David Payne, staff economist and reporter at The Kiplinger Letter, writes in the Kiplinger jobs outlook that "the new normal for jobs reports going forward is likely to be gains of fewer than 100,000, rather than additions in six digits."
ADP jobs report is better than expected
Wall Street got a peek at how things are going in the labor market on Wednesday morning with the ADP National Employment Report, which showed private payrolls rose by 86,000 in October, down from 90,000 in September but above the 75,000 economists expected.
The industries seeing the largest increases in jobs were trade, transportation and utilities; education and health services; and leisure and hospitality. Professional and business services and natural resources and mining saw the biggest declines in positions.
When is the next jobs report?
The Bureau of Labor Statistics will release the next jobs report at 8:30 am Eastern Standard Time on Friday, November 6. Economists expect the U.S. to have added 59,000 new jobs in October and the unemployment rate to remain at 4.2%.
Ahead of the October jobs report, we looked at what economists, strategists and other experts on Wall Street expect the data to show and what the results could mean for the Fed and investors going forward. You'll find these outlooks, edited at times for brevity, below.
What Wall Street expects from the October jobs report
"We expect headline (+55,000 forecast vs +29,000 previously) and private (+55,000 vs +46,000) payrolls to edge up closer to their three-month averages of 51,000 and 54,000, respectively. If our forecast is close to the mark, the unemployment rate should remain unchanged at 4.2%. We expect hours worked to remain steady at 34.4 hours alongside a rebound in average hourly earnings (+0.3% vs +0.1%). The upshot of our establishment survey forecasts is that the year-over-year growth rate of our payroll proxy for nominal compensation growth should slip a tenth to 4.1% – still supportive of solid consumer spending growth." - Deutsche Bank economists
"We estimate that nonfarm payroll employment grew 50,000 in October, following gains in August (+133,000) and September (+29,000). Barring revisions, October's headline forecast would place the three-month moving average for the three months ending in October at +71,000 per month, stronger than the +28,000 per month pace in the three months ending in July. Our forecast of a 0.1 percentage point decline in the unemployment rate to 4.1% would come on the heels of a slight uptick in September's estimate. In our view, this combination would keep an FOMC hike in play for the December meeting, as it continues to assess data developments." - Marc Giannoni, Chief U.S. Economist, Barclays
"Private employment, as measured by the ADP Employment Survey, increased more than expected in October, by 86,000 — the same number of jobs reported in September. The release indicated that workers were lured to these new jobs by a combination of higher pay, bonuses, and more hours. Every sized business increased job count in October. Manufacturing employment declined while construction jobs continued to expand, supported by data center construction. The report shows that the labor market remains in expansion and stable. On Friday, we will see if the nonfarm payrolls report matches with this ADP private employment report." - Eugenio J. Alemán, Ph.D., Chief Economist, Raymond James
"The RSM forecast of the October U.S. jobs report anticipates a net gain of 95,000 jobs on the month, or nearly three times the number needed to keep the labor market stable. The remarkable stability in jobless claims amid the robust 3.4% growth in the economy during the third quarter of the year suggests that conditions are ripe for an increase in demand for labor. The household estimate should result in a 4.2% unemployment rate, which reflects an economy at full employment within a context of an 11.5-week median duration of unemployment and a slow increase in those facing unemployment for 27 weeks or longer. That longer-term figure stands at 1.94 million people out of a potential labor force of 170 million." - Joseph Brusuelas, Chief Economist, RSM US
"We expect nonfarm payrolls to rise 65,000 in October, roughly in line with its average pace over the past six months. The theme of the labor market remains one of stability. Initial jobless claims remain historically low, while job openings continue to move sideways. The employment indices from regional Fed surveys pulled back modestly in manufacturing this month, but remain in expansion territory for both goods and services. We expect the unemployment rate to hold steady at 4.2%. The rebound in labor force participation over the past few months has been encouraging, but is probably going to peter out soon amid ongoing population aging and low net immigration. The labor market remains broadly in balance and is not the source of today's above-target inflation." - Wells Fargo economists
"Unlike last month, when the alternative data looked robust, October has been more of a mixed bag. Still, I think the numbers should look better (stronger employment growth in the mid- or high-double-digits, slightly lower unemployment) for two reasons. The first is some expected catch-up from the BLS data after last month's disappointment, though of course it's possible that catch-up will be spread out over several months. The second reason is that softening in the alternative data was more concentrated in the back half of October; i.e., if that softness persists, it probably has more significance for the November jobs report than for October's." - Guy Berger, Ph.D., Senior Advisor on Labor Markets at Access/Macro
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