NFP Friday – 6th October 2023

NFP Friday – 6th October 2023

Traders and economists are expecting the NFP report to show that 171K net new jobs were created in September and that average hourly earnings rose 0.3% m/m.

The US labour market remains perplexingly strong. While recent NFP readings have moderated slightly – the 3-month average of jobs created stands at 176K prior to Friday’s revisions – they are still more than enough to keep up with population growth. More to the point, other measures of the jobs market remain relatively tight.

As for the impact on policy, it would take a particularly strong jobs report to tilt the Fed toward hiking interest rates at its November meeting.

By now, most regular readers know that we focus on four historically reliable leading indicators to help handicap each month’s NFP report:

  • The ISM Manufacturing PMI Employment component printed at 51.2, up a point from last month’s 48.5 print.
  • The ISM Services PMI Employment component printed at 53.4, down a point from last month’s 54.7 print.
  • The ADP Employment report came in at just 89K net new jobs, above expectations and in-line with last month’s 180K reading.
  • Finally, the 4-week moving average of initial unemployment claims fell to 209K, down from 229K last month.
  • Gold is likely to react slightly stronger to an upbeat jobs report than a disappointing one.
  • Gold price’s inverse-correlation with NFP surprise weakens slightly by the fourth hour after the release.

Weighing the data and our internal models, the leading indicators point to a roughly in-line reading in this month’s NFP report, with headline job growth potentially coming in somewhere in the 150-225K range.

Regardless, the month-to-month fluctuations in this report are notoriously difficult to predict, so we wouldn’t put too much stock into any forecasts (including ours). As always, the other aspects of the release, prominently including the closely watched average hourly earnings figure which rose 0.2% m/m last month, will likely be just as important as the headline figure itself.

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