US NFP figure likely to have risen in October 2018

01 / 11 / 2018 | Market News
The day that most economists across the world are waiting for in the beginning of each month has arrived. On Friday November 2nd 2018 the United States (US) Department of Labour will publish the Nonfarm Payrolls data for October 2018. The data releases won’t stop here as market analysts will also have the opportunity to scrutinize data regarding the average hourly earnings and the country’s unemployment rate in October 2018. 

Nonfarm Payrolls (NFPs) October 2018 figure

The majority of economists polled by Bloomberg on October 29th 2018 suggest that the US NFPs figure will likely come in at around 190,000 in October 2018. The figure is expected to surge after a disappointing 134,000 reading recorded in September 2018. The September figure was well below market expectations of 185,000. This has been the lowest reading in the last 12 months with analysts suggesting that the Hurricane Florence and the devastation it caused in the Bahamas played a role. 

During September 2018 the majority of new jobs was added in the professional and business services, healthcare and transportation. Nonfarm Payrolls data is released by the US Department of Labour and represents the number of new jobs created during the previous month, in all non-agricultural business. New farm employees are excluded due to the seasonality of their profession. NFPs are regarded as an important indicator of economic conditions because they move closely in line with the overall economy. 

Average Hourly Earnings And Unemployment Rate

Market analysts will be expecting to scrutinise data associated with the average hourly earnings and the unemployment rate. According to their forecast, the average earnings are likely to pick up coming in at 3.1% on an annualised basis in October 2018. If the forecast is confirmed, the reading will be 0.3% higher than the September 2018 recorded figure. 

Regarding the US unemployment rate in October 2018, economists suggest that it remained unchanged at 3.7% as in September 2018. The September figure was 0.2% lower than the July and August 2018 ones and below market expectations of 3.8%. This is the lowest jobless rate recorded since December 1969. Since January 2018 the unemployment rate has lowered by 0.5% in total. 

ADP Employment Report

The ADP employment report published on Wednesday October 31st 2018 surprised market analysts on the upside. The ADP employment report recorded 229,000 new jobs added in the US economy in October 2018, well above the 189,000 figure in the market’s forecast. The 229,000 new jobs reading is the best recorded since October 2014. Some analysts suggest that the correlation between the ADP employment and the NFPs final reports indicate that Friday’s data may surprise the markets. 

However, analysts at Nomura suggested in a report published on Wednesday October 31st that the ADP employment report and the NFPs final figure may not be in line this time. “Today’s report suggests some upside risk to our forecast of a 170k gain in private nonfarm payroll employment for Friday’s BLS report. However, ADP usually does not reflect weather disruptions. Given the impact of Hurricanes Florence and Michael in September and October, there is more uncertainty than usual around Friday’s NFP number and today’s ADP report may not accurately reflect the negative impact from Hurricane Michael,” is noted in their report. 

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