Economists focus on US NFPs and average earnings

04 / 10 / 2018 | Notizie sul mercato
One of the most important moments in the month regarding the financial world is coming on Friday October 5th 2018. On that day the US Department of Labour will publish the September Nonfarm Payrolls (NFPs), the average weekly earnings and the unemployment rate in the country. Economists will pay special attention as the fourth quarter of 2018 (Q4 2018) kicked in and the US Federal Reserve board seems to be preparing to raise borrowing costs in December 2018. 

US NFPs in September 2018

These financial data reports are important for global market analysts as the US is one of the largest economies in the world. 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.

Economists anticipate a drop in the NFPs figure. More specifically, they expect the data to show that 185,000 new jobs were added to the US economy during September 2018. In August 2018, according to data published on September 7th 2018, NFPs impressed the markets coming in at 201,000. The figure beat market expectations of 191,000, following July’s 2018 downwardly revised 159,000. The reading was the highest recorded since February 2018. The accompanying report for August 2018, published by the US Department of Labour, mentioned that employment had grown in the professional and business services, healthcare and wholesale trade sectors.

Analysts at Wells Fargo, one of the largest banks in the US, noted that they raised their estimates for the NFPs figure from 185,000 to 210,000. They stress that the new forecast is based on the fact that the ISM non-manufacturing index hit a 21-year high in September 2018, according to data published on Wednesday October 2nd  2018. “The ISM non-manufacturing index hit a 21-year high in September, leaping 3.1 points to 61.6. Current activity, new orders and supplier deliveries all increased. Backlogs continue to rise, helped in part by elevated levels of export orders. The employment index jumped to an all-time high of 62.4. We have subsequently raised our September nonfarm payroll forecast to 210,000 from 185,000. Respondents noted, however, that labor shortages are beginning to weigh on growth and earnings,” was written in their report published on Thursday October 3rd 2018. 

US Average Hourly Earnings

The US Department of Labour is going to release data regarding the average hourly earnings in September 2018. Economists forecast that the average hourly earnings increased by 2.8%, on an annualised basis. If the forecast is confirmed, the figure will be 0.1% lower than August’s 2018 reading. On a month-to-month basis, average hourly earnings are expected to have risen by 0.3%, a bit lower than the August’s 2018 figure. Average hourly earnings are important because the US Federal Reserve takes them into consideration when the Federal Open Market Committee (FOMC) convenes to decide on interest rates.

US Unemployment Rate

The unemployment rate in the US is the last major data release on October 5th 2018. Economists are suggesting that the unemployment rate will likely come in at 3.8% in September 2018, 0.1% lower than the figure recorded in August 2018. 

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