October non-farm payrolls preview by the numbers: Hurricane and strike effects in focus

• Consensus estimate +113K
• Estimate range +0K (ABN AMRO) to +200K (DBS Bank)
• September was +254K
• Private consensus +90K versus +223K prior
• Unemployment rate consensus estimate 4.1% versus 4.1% prior
• Prior unrounded unemployment rate 4.0510%
• Prior participation rate 62.7%
• Prior underemployment U6 7.7%
• Avg hourly earnings y/y exp +4.0% versus +4.0% prior
• Avg hourly earnings m/m exp +0.3% versus +0.4% prior
• Avg weekly hours exp 34.2 versus 34.2 prior

Numbers released so far this month:

• ADP report +233K versus +159K prior — best in a year
• ISM services employment not yet released
• ISM manufacturing employment not yet released
• Challenger job cuts 55,597 versus 72,821 prior
• Philly employment -2.2 vs +10.7 prior
• Empire employment +4.7 vs +2.9 prior
• Initial jobless claims survey week 242K versus 259K prior

Of these numbers, BMO highlights initial jobless claims noting that the directional miss of that report compared to expectations is often mirrored by non-farm payrolls.

Seasonally, the October jobs headlines misses and beats 50% of the time but the average beat is 71K and average miss is 38K. Meanwhile, the unemployment rate tends to be lower 42% of the time, higher 23% of the time and matching the consensus in the remainder.

The kicker in these numbers is that they are assumed to be highly distorted by hurricanes, the Boeing strike and potentially the longshoreman strike. That has shaved around 50K off the consensus, though it’s drifted back up since ADP. Because of that, I don’t think the market will punish a poor reading, though we might see bonds bid.

A strong reading would get some attention and help lift the US dollar but I can’t see any reasonable number impacting the Fed decision next week, which is 94% priced for a cut, though maybe we would see less-dovish guidance for the Dec 18 meeting? Or at least a stronger commitment to data dependence.

This article was written by Adam Button at www.forexlive.com.