Will hurricanes have an impact on jobs and will the market even care?

Friday’s non-farm payrolls are forecast to be weaker - something in the region of 80k-100k is expected, which would be a fairly significant slowdown from 156k the month before.

However given the storms it seems unlikely anyone is going to read too much into it even if does fall short of this low bar. Dollar weakness on any miss would probably be short-lived as the Fed is intent on raising rates in December and a softer NFP will not change that. Friday's numbers will have a much bigger margin for a miss than usual after the inclement weather in the US.

Moreover, the jobs data itself is a little less important since there are diminishing returns on what the headline number means for inflation. The US labour market is already tight although we will as ever look for any change in the labour force participation rate to see if there is any hidden slack being absorbed.

Arguably wages are the key here and are expecting to increase 0.3%. There is some sense that the weak inflation data may be coming to an end and we may start to see firmer price growth into the year’s end. Stronger wage growth would likely feed into a higher PCE inflation reading in Q4.

The main macroeconomic indicators are upbeat. The ISM PMIs show very strong activity growth and suggest the hurricanes that battered the south coast states will not have a major impact on GDP in the third quarter.

The ISM non-manufacturing gauge came in at 59.8, its best reading since August 2005. That was after the manufacturing index registered its best reading since 2004.

Private payrolls figures, admittedly not always the best indicator, suggest a weak reading. ADP reported 135k jobs were added September. Whilst this was the smallest increase since October 2016, it was nevertheless ahead of expectations.

 

or LOGIN as existing customer


Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and ETX Capital accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.