Jobs Number on Friday: What to Expect
- BLS Nonfarm Payroll numbers out on Friday
- Insight into Federal Reserve thought process
- Major indicator of health of US economy
The Nonfarm Payroll announcement comes out on Friday and is expected to be a major influence on what happens with the Federal Reserve going forward. This number will affect and perhaps even report on what the US economy is doing, with 70% of the said economy based on consumer consumption.
The more people employed, the more spending that happens – or so goes the theory. It is because of this that paying close attention to the jobs number is vital.
The expected numbers
The expected numbers for the announcement include the Average Hourly Earnings month-over-month, Nonfarm Employment Change, and Unemployment Rate. When this announcement comes out, there will be a lot of liquidity issues as traders simply step away from the market and digesting the announcement becomes paramount.
With this, you get a strong volatile reaction in the marketplace and across all assets. It can be a dangerous time to trade, but it does tend to have an influence on the longer-term trend.
For the Average Hourly Earnings month-over-month figures, there is an anticipated 0.3% reading for October. A number higher than that would be a strong sign for the economy and be more of a “risk-on” move just waiting to happen. This is because an increase in hourly pay is more likely to see consumers more looking to spend money. Quite often, this market gets a little less attention from the headline perspective, but it is in fact very crucial.
The “top-line number” is the Nonfarm Employment Change figure, which will measure all jobs added or subtracted from the economy during the month of October. This excludes farm-related jobs, which tend to be more seasonal. The expected figure is 90,000 jobs added, which would be rather small in relation to the most recent number.
However, it should be noted that there are many people employed in the United States right now. Even with a small number of jobs added, it may be a bit of a skewed figure due to the fact that there aren’t that many individuals looking for work.
The Unemployment Rate will also come out and is expected to be 3.6%. This “top-line number” will be paid close attention to. We are at historic lows, so it will take quite some effort to drive this number even lower.
Will things change?
One thing that should be carefully considered is whether or not the economy is shifting. But with the FOMC Statement coming out just on Wednesday, it is probably simply another piece to the puzzle as to where the Federal Reserve will go next.
Ultimately, the Federal Reserve has suggested that the path of interest rate policy is relatively flat right now and will “act as needed”. If that’s going to be the case, these numbers are very important to pay attention to.
That said, it may not change much as the Federal Reserve will be watching several different pieces at the same time. However, going forward, one should always pay attention to how employment is trending.