U.S. nonfarm payrolls likely rose in October, jobless rate to have remained stable at 4.2 pct

Nonfarm payrolls in the U.S. are likely to have increased in October. According to a TD Economics research report, nonfarm payrolls are expected to have fully given back its hurricane-induced weakness and recorded a gain of 330k. However, uncertainty is high with scope for surprise in either direction. The forecast assumes a 200k-250k drag from the two hurricanes, which are expected to have fully recovered in October, stated TD Economics.

Earlier hurricane episodes, such as Katrina, imply a full recovery in payrolls might be delayed, yet this experience is different given the trend in jobless claims that have fully rebounded. Given that labor market indicators are in line with monthly payroll gains of 175-200k, October payrolls might easily print closer to 400k or higher, said TD Economics.

However, there is caution as the full recovery might not be realized until subsequent revisions, as was the case in earlier natural disasters. Moreover, payrolls for the month of September are likely to be revised up. The jobless rate is expected to have remained stable at 4.2 percent. Meanwhile, average hourly earnings are likely to have risen 0.2 percent sequentially. This will push the annual rate lower to 2.7 percent year-on-year or 2.6 percent year-on-year if downside is realized, added TD Economics.

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