Non-farm payrolls preview: Jobs report set to land in a fragile market

<p>Could this be a miss? Let's look at the numbers:</p><ul><li>Consensus estimate +170K (range +90-+256K)</li><li>Private +160K</li><li>August +187K</li><li>Unemployment rate consensus estimate: 3.7% vs 3.8% prior</li><li>Participation rate consensus 62.8% prior</li><li>Prior underemployment U6 prior 7.1%</li><li>Avg hourly earnings y/y exp +% y/y vs +4.3% prior</li><li>Avg hourly earnings m/m exp +0.3% vs +0.2% prior</li><li>Avg weekly hours exp 34.4 vs 34.4 prior</li></ul><p>September jobs so far:</p><ul><li>ADP report +89K vs 153K expected and +180K prior</li><li>ISM services employment 53.4 vs 54.7 prior</li><li>ISM manufacturing employment 51.3 vs 48.5 prior</li><li><a href="https://www.forexlive.com/news/us-august-challenger-layoffs-7515k-vs-2370k-prior-20230831/" target="_blank" rel="follow">Challenger Job Cuts </a>-58.2% y/y vs -266.9% prior</li><li>Philly employment -5.7 vs -6 prior</li><li>Empire employment -2.7 vs -1.4 prior</li><li>Initial jobless claims survey week 202K vs 232K last month</li></ul><p>The data is due out at 8:30 am ET on Friday, that's 1330 GMT.</p><p>According to BMO, 12% of previous unemployment reads in September have beaten estimates, 60% have been lower and 28% have been close to consensus.</p><p>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.</p><p>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.</p>

This article was written by Adam Button at www.forexlive.com.