U.S. non-farm payrolls likely to rise in Oct, downward pressure likely to exist on jobless rate

The October Labor Department employment situation report will be released on Friday, 4 November at 08:30EDT (12:30GMT). Overall, we expect non-farm payrolls will increase +180k in October (market expectations are for a +173k increase), versus the +156k reading seen in September, alongside a decrease in the unemployment rate to 4.9 percent (market expectations are for a 4.9 percent result).

Great focus will likely be paid to gains in total private employment which we expect will increase around +170k. Beyond the headline, we expect average hourly earnings will increase +0.2 percent m/m, alongside an increase in weekly hours to 34.4. On balance, despite the volatility seen in recent months, we anticipate further improvement taking hold in the coming months as conditions gradually improve.

Given the greater focus on what the Fed is likely to do next following liftoff in December, we anticipate the September employment report will be sufficiently strong enough to justify additional moves higher (though other factors and subsequent reports will likely keep policymakers second-guessing).

October non-farm payrolls look to continue along an expansionary course, something that could be bolstered by revisions to the September estimate (possibly also for August). On balance, we expect broader improvement in services to accommodate further gains.

With respect to the headline, we anticipate net gains in payrolls of 180k in October, following the +156k result seen in September, alongside a decrease in the headline unemployment measure to 4.9 percent. As conditions improve, we expect to see some further downward pressure in the unemployment rate, possibly offset by people re-entering the workforce (making it more sticky), though we anticipate broader improvement as we further into 2016.