Nonfarm payrolls
Nonfarm payrolls

Could this be a miss? Let's look at the numbers:

  • Consensus estimate +170K (range +90-+256K)
  • Private +160K
  • August +187K
  • Unemployment rate consensus estimate: 3.7% vs 3.8% prior
  • Participation rate consensus 62.8% prior
  • Prior underemployment U6 prior 7.1%
  • Avg hourly earnings y/y exp +% y/y vs +4.3% prior
  • Avg hourly earnings m/m exp +0.3% vs +0.2% prior
  • Avg weekly hours exp 34.4 vs 34.4 prior

September jobs so far:

  • ADP report +89K vs 153K expected and +180K prior
  • ISM services employment 53.4 vs 54.7 prior
  • ISM manufacturing employment 51.3 vs 48.5 prior
  • Challenger Job Cuts -58.2% y/y vs -266.9% prior
  • Philly employment -5.7 vs -6 prior
  • Empire employment -2.7 vs -1.4 prior
  • Initial jobless claims survey week 202K vs 232K last month

The data is due out at 8:30 am ET on Friday, that's 1330 GMT.

According to BMO, 12% of previous unemployment reads in September have beaten estimates, 60% have been lower and 28% have been close to consensus.

Treasury yields backed up after the softer ADP reading but its track record at forecasting non-farm payrolls is abysmal so I there's reason for caution here, especially with initial jobless claims staying so low. The market is pricing in just a 22% chance of a Fed hike on November 1 but a strong reading here would be a major challenge to that, or at least might prompt some dissents.

The dollar trade is moderately crowded but I would still say that risks run both ways here given that the dollar hasn't fully tracked the move up in yields. A strong reading would also spark major talk about 5% 10-year yields.