Daily Insight
Group Economics Macro & Financial Markets Research
04 November 2015
US job market preview: stress behind us
We expect a modest improvement in October’s US nonfarm payrolls…,
Senior Economist
… despite some disappointing preliminary job market data
Tel: +31 20 343 5618
US bank lending survey: some tightening in standards, for the first
Maritza Cabezas
maritza.cabezas @nl.abnamro.com
time since 2012
Nonfarm payroll to show modest improvement, as financial stress dissipates For the employment report to be released on Friday, we are expecting an increase of 170K, this is slightly below consensus. This is a moderate increase compared to the last two nonfarm payroll gains, which averaged 139K, and below the average of the first seven months of the year (214K). The expected gains are consistent with an economy that is growing around trend rates and with more stability in financial markets. Preliminary job data, however, a bit disappointing October’s preliminary employment surveys weakened. The employment component of the PMI released earlier this week was quite disappointing, dropping to 47.6 from 50.5 in September. This would suggest that the weakness that we have seen in manufacturing jobs data continued in October. In general, we expect goods-producing employment to remain soft. The impact of the strong dollar has hindered gains in jobs in this category, particularly in export related activities and we don’t expect this to have changed in the next report. Meanwhile the most recent JOLTS report released in October, which looks at the dynamics in the labour market, showed some softness. There were fewer job openings in many service-sector industries, as well as for government employment. Fed is relying on improvement of job market for liftoff FOMC members would like to see an improvement in the labour market as part of the conditions to hike rates. We don’t expect a sharp rebound in October’s nonfarm payrolls data, but moderate growth should continue. For the Fed job gains should be reasonable enough to put behind any doubts about the firmness of the labour market. Chair Yellen mentioned during her intervention on “Inflation Dynamics and Monetary Policy”, that a sustained improvement in the labour market was needed, to reduce slack in in a broad dimension in the labour market, including labour force participation rate and persons employed involuntary part-time from economic reasons. We think that it will still take a
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