US NFP Preview: 6 major banks expectations from September release

As we are closing in on the September month’s release of US Non-Farm Payrolls data, here are the expectations as forecasted by the economists and researchers of 6 major banks.

All the 6 major banks suggest that recent storms may impart a significant short-term drag on the payroll figures and as a result expect the September NFP to post a reading in between 50K to 120K as the market appears to be confused by itself. In addition, they expect the unemployment rate to remain unchanged at 4.4% in September with upside risks to the forecast.

Danske Bank

We expect the jobs report for September will show below trend progress in the labour market due to hurricanes Harvey and Irma. Although we still see underlying strength of the labour market as solid, job creation is usually negatively affected following major hurricanes. We expect employment rose 90,000 in September (although uncertainty is higher than usual) against a 12-month moving average of 175,000 and we expect a broad-based slowdown in job creation. In our view, the negative impact on the labour market should be short-lived, as we have already seen initial jobless claims are beginning to come down again. We do not expect to see a decline in the unemployment rate (although risk is probably skewed towards an increase). Finally, we estimate average hourly earnings to be relatively unaffected by the hurricane season and hence expect an increase of 0.2% m/m, implying wage growth rate of 2.5% y/y, unchanged from August. We expect markets to mainly look at average hourly earnings and not so much nonfarm payrolls and unemployment, unless they surprise on the upside. 

ING

The variation around the expectations for today's nonfarm payrolls release is huge given the hurricane factor. Our team are looking for a print around +110k and while consensus is at +80k, the standard deviation among analysts is 40k (double what it normally is). This suggests that a payrolls surprise may have a subdued impact on markets. While a negative surprise may be chalked down to hurricane effects, and potentially overlooked by markets, we think this may already be in the price of the USD (the Bloomberg Whisper number is +117k).”

Deutsche Bank

An in-line ADP print (135k) earlier in the week and decent employment component readings out of the ISM’s makes it feel like the whisper number is slightly above the market consensus for today of 80k (vs. 156k in August). Our US economists expect a 50k reading though. They've noted that the initially reported September 2005 employment report, which followed Hurricane Katrina, showed a -35k decline in nonfarm payrolls after averaging 174k over the three months ending in August 2005. It’s worth noting that the highest and lowest economist forecasts on Bloomberg for today are 260k and -45k - so the street collectively appears pretty confused. In these high intensity wage/inflation watching times, the average hourly earnings will be key. Our guys expect a solid 0.3% m/m partly for technical reasons.

TDS

We expect a 120k print on September’s nonfarm payrolls. Friday’s jobs report should be viewed cautiously in light of recent weather disturbances — particularly Hurricane Irma, which impacted the survey week. The storms may impart a significant short-term drag on the payroll figures that should reverse in October; some estimates have suggested a sizeable drag of more than 100k. We lean to the more optimistic side of consensus since indicators have been consistent with payroll growth near 200-230k, while hurricane impacted jobless claims have come in better than expected. With a moderately negative impact from Irma, we look for payrolls to print 120k. We expect the unemployment rate to be unchanged at 4.4%, with upside risks due to the slowdown in employment growth. Meanwhile, we expect average hourly earnings to post a 0.3% m/m increase, leading annual growth a tenth higher to 2.6% y/y. Perhaps somewhat counter-intuitively, the hurricanes could arithmetically impart some upside to the monthly print by reducing hours worked for salaried employees. Calendar effects also suggest risks are to the upside for September, though past disappointments suggest another downside surprise cannot be ruled out.

Nomura

The effects of Hurricanes Harvey and Irma introduce a large amount of uncertainty to our September payrolls forecast. We expect nonfarm payroll employment to increase 50k, with a 45k increase in private payroll and 5k from the government. However, there are significant upside and downside risks to these forecasts depending on how employment, especially in Florida, was affected during the survey week.More important, despite the print this Friday, the underlying pace of the labour market remains strong and any weakness in September will likely be transitory. We forecast an above-average 0.4% m-o-m increase in average hourly earnings (AHE). A calendar quirk and a likely reduction in working hours (due to the hurricanes) contribute to the large expected increase. We expect modest wage growth, much lower than in 2007 when the unemployment rate was at similar levels. Due to differences in definitions between the establishment and household surveys, we expect the hurricanes to exert a less pronounced effect for the measures from the household survey. We expect the unemployment rate to be unchanged at 4.4% (4.380%) and the labour force participation rate to remain near the levels that have persisted over the past several years."

Westpac

August nonfarm payrolls surprised to the downside, with only 156k new jobs created in the month and a cumulative 41k in downward revisions to June and July. The BLS reported that Hurricane Harvey had no discernable impact on employment in the month. September is likely to be a different story, with many workers in affected areas forced to stay away. However, continued robust job growth across the rest of the nation should beget a moderate positive outcome overall. Note that weather-affected prints can be subject to material revisions. Hence it is best to focus on 3 and 6 month averages, both of which continue to show strength. WBC 100k. Household employment is less affected by the weather, so expect the unemployment rate to remain unchanged at 4.4%.

Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls Preview: sour numbers to have limited impact of Fed's decision”