November non-farm payrolls preview by the numbers: A rebound, but how high?

• Consensus estimate +120K
• Estimate range +155K to +275K
• September was +12K
• Private consensus +200K versus -28K prior
• Unemployment rate consensus estimate 4.2% versus 4.1% prior
• Prior unrounded unemployment rate 4.145%
• Prior participation rate 62.6%
• Prior underemployment U6 7.7%
• Avg hourly earnings y/y exp +3.9% versus +4.0% prior
• Avg hourly earnings m/m exp +0.3% versus +0.4% prior
• Avg weekly hours exp 34.3 versus 34.3 prior

Numbers released so far this month:

• ADP report +146K versus +150K prior
• ISM services employment 51.5 vs 53.0 prior (though was still 2nd highest of the year)
• ISM manufacturing employment 48.1 vs 44.4 prior
• Challenger job cuts 57,727 versus 55,597 prior
• Philly employment +8.6 vs -2.2 prior
• Empire employment +0.9 vs +4.1 prior
• Initial jobless claims survey week 215K versus 240K ahead of last month’s report

I think the chart here shows the story no matter what happens this month. There is a steady weakening with some peaks and valleys and the same picture unfolds in the JOLTS data. That has virtually all Fed members convinced that the jobs market is loosening and that’s not going to change with one jobs report that will undoubtedly be skewed by hurricane impacts, the election and the end of the Boeing strike.

If anything, I would expect a reading above the consensus based on the anecdotes highlighted here but I’m not convinced that will lead to a lasting US dollar rally. Perhaps most-important will be a speech from SF Fed President Mary Daly at 1 pm ET on Friday. She’s been a mouthpiece for Powell before and she could offer up an indication on what the FOMC will do on December 18.

In order to dissuade the Fed, all else equal, I think we will need to see +300k jobs.

Seasonally, the headline print is historically split between higher and lower but the unemployment rate is below estimates 46% of the time, while 12% have been higher and 42% have been in line, according to BMO. But also note that the consensus is almost evenly split between 4.1% and 4.2% so the ‘consensus’ could change before the release.

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