US NFP Prep
On Friday, the 3rd of October at 08:30 ET, the BLS is set to release the latest US Employment Situation Report, including Nonfarm Payrolls, Unemployment Rate, and Average Earnings.
Keep in mind that, in the event of a government shutdown, this data release will be delayed, as the BLS is an area that would be shut down during this time.
Nonetheless, here are some views on what to expect.
Overview
Forecasts subject to change
Nonfarm Payrolls – Forecast: 51k | Prior: 22k | Range: 105k / -20k
Unemployment Rate – Forecast: 4.3% | Prior: 4.3% | Range: 4.4% / 4.2%
Average Earnings YoY – Forecast: 3.7% | Prior: 3.7% | Range: 3.8% / 3.4%
General Expectations
Higher-than-expected NFP and/or lower-than-expected Unemployment Rate would likely lead to weakness in US stocks, and strength in the dollar and government bond yields, as it would cause markets to reduce bets on further Fed rate cuts this year
Lower-than-expected NFP and/or higher-than-expected Unemployment rate would likely cause strength in US stocks, and weakness in the dollar and government bond yields, as it firms up market bets on future Fed rate cuts this year.
Commentary
Wells Fargo
Job growth has slowed significantly in recent months, with payrolls averaging just 29K per month through August. The unemployment rate has edged up to 4.3%, a near four-year high, signaling a sputtering labor market. Hiring in September is estimated to have increased modestly by 45K jobs, with the unemployment rate narrowly avoiding 4.4%. Job postings remain below spring levels, and regional Fed surveys indicate little change in hiring activity, even as small businesses gradually plan to expand headcount. Despite cautious hiring, firms remain reluctant to lay off current staff, keeping initial jobless claims stable around 230K.
Labor force participation has seen only a modest rebound, with risks tilted toward the unemployment rate rising to 4.4%, potentially exceeding the FOMC’s estimates of full employment. Limited labor force growth alongside strong productivity has kept wage gains relatively firm, with average hourly earnings estimated to have risen 0.3% in September, maintaining a 3.7% year-over-year rate. However, the combination of weaker hiring, subdued hours worked, and persistent inflation is expected to constrain nominal income growth in the coming months, which could influence the Fed’s decision on a potential 25 bps rate cut at the October 29 meeting.
Bank of America
September NFP is likely to rise by a stable 65k (consensus: 50k, Aug 22k). Claims stabilized during the survey week. Robust air travel and consumer spending should bode well for leisure & hospitality jobs. We expect upward revisions to the August jobs report, given the low response rate and seasonal factors. We see headwinds from layoffs in professional & business services (AI uptake), goods-producing (tariff uncertainty) & government (DOGE) sectors. We expect the u-rate to remain at 4.3% as jobs remain above/close to breakeven.
Credit Agricole
Recent jobs data show a clear slowdown, putting the employment side of the Fed’s mandate in focus. For September, NFP gains are tentatively expected to rebound to +55K, up from +22K in August, while the unemployment rate is likely to hold at 4.3%. Average hourly earnings are projected to rise 0.2% month-over-month, bringing the year-over-year pace slightly down to 3.6% from 3.7%. Forecasts remain somewhat uncertain, as key components from the consumer confidence report and ISM surveys have not yet been released and may prompt revisions.
If the jobs data align with expectations, the Fed would likely remain on track for additional easing, though the timing and magnitude remain uncertain. Given several stronger-than-anticipated reports this week, the outlook leans toward a more hawkish path, with only one more rate cut projected this year. A weaker-than-expected report, however, could increase the probability of two additional cuts by year-end.
Previous Release
On September 5th, the BLS released the US Employment Situation report for August
Nonfarm Payrolls came in lower than expected, down to 22k from 79k, lower than the expected 75k.
The Unemployment Rate ticked up to 4.3%, as expected.
This release caused strength in the US index futures, and weakness in the dollar and government bond yields, as the markets boosted chances of a Fed rate cut in order to stimulate the labour market.
