U.S. non-farm payrolls likely to have increased in September

Non-farm payrolls in the U.S. are expected to have increased in September; however, below the consensus projection. According to a Danske Bank research note, non-farm payrolls are likely to have risen 160,000 in September as compared with the consensus expectations of 170,000. This would be a bit more than the job growth of 151,000 in August.

Employment growth signals came in mixed in September. Initial claims numbers continue to imply that employment grew quite above 200,000, whereas the Markit PMI employment index just implies job growth of just above 100,000. Service sector is expected to have mainly driven the growth in employment. Jobs in services are expected to have increased by 120,000. Manufacturing employment is likely to have remained unchanged after dropping by 14,000 in August, while construction employment is expected to have increased by 20,000 jobs, stated Danske Bank.

Growth in employment decelerated in August following two months of solid gain. This still leaves the average job growth over the summer at a strong level of 230,000 per month. But the solid employment growth came after very weak spring. Thus it is questionable whether the labor market has tightened further this year.

The jobless and underemployment rates have moved sideways for certain time. This implies that there continues to be slack in the labor market, noted Danske Bank.

“We estimate the unemployment rate was unchanged at 4.9 percent in September. With respect to average hourly earnings, we think they rose 0.3 percent m/m in September, implying a wage inflation rate at 2.6 percent y/y”, added Danske Bank.