Complete Non-Farm Payrolls Report Preview

Many thought Goldman was joking when, in its preview of today's delayed September NFP, it essentially said the number doesn't matter - it will be bullish no matter what (a +1 million print will be bearish as it means 2 million have to reenter the workforce now that the labor participation rate is an issue, as opposed to 2010 when it was only mentioned on Zero Hedge; a -1 million print will mean taper in 2099; both numbers will be spun as better than in reality due to the government shutdown that did not even take place in the month of September) as it means more Fed, more of the time. Sadly, in central-planning that pretty much covers it up. For everyone wanting some more info on what to expect in under half an hour, here is the full breakdown from RanSquawk.


September US Non-Farm Payrolls



  • US Change in Nonfarm Payrolls (Sep) M/M Exp. 180k, Low 100k, High 256k (Prev. 169k, Jul 104k)

  • US Unemployment Rate (Sep) M/M Exp. 7.3%, Low 7.1%, High 7.4% (Prev. 7.3%, Jul 7.4%)


"Safety in Numbers" estimates by bank:



  • Deutsche Bank 170k

  • Bank of America 170k

  • HSBC 171k

  • Citigroup 180k

  • UBS 195k

  • JP Morgan 195k

  • Barclays 200k

  • Goldman Sachs 200k


The September nonfarm payrolls report will be released today, eleven days later than originally scheduled, after a bipartisan agreement was reached to reopen the US government.


The release, as has become the norm, will be used to gauge when the Fed will begin to reduce its QE3 programme. However, amid the fiscal dysfunction on Capitol Hill, several FOMC members noted that delays to key macroeconomic data due to the shutdown may prevent the Fed from making informed changes to its policy measures. Furthermore, a very similar budgetary stand-off in the US may well be seen in the new year, with last week’s deal being just a temporary measure to fund the government until mid-January. As a result, many analysts have pushed back their forecasts for a reduction in Fed bond-buying.


Last month, 169k jobs were added, lower than the expected 180k and the previous month was given a large downward revision. The unemployment rate declined to 7.3% from 7.4% in July; however, this was attributed to a decline in the labour force participation rate.


The September ADP employment reading, which is calculated using a very similar methodology to nonfarm payrolls, came in at 166k, missing the median expectation of 180k, with the previous reading also seeing a significant downward revision. As has been seen in many of this year’s NFP readings, the ADP release suggested that US labour market activity is continuing to soften. US government austerity measures prior to the shutdown, as well as the recent rise in rates, appear to have dampened the recovery. It may also have been hampered by investor concern over the approaching budgetary gridlock that had been on the horizon for many months.


Market Reaction


As mentioned, many participants believe the Fed will be reluctant to reduce QE given the uncertainty over both the economic effects of the shutdown and the outcome when the temporary deal lapses. If that is the case, a reasonably strong reading could boost sentiment, lifting stocks and weighing on bonds in a knee-jerk reaction. But with stocks at near-all-time highs, there may be little scope for further upside. Conversely, a very strong number, significantly above the majority of expectations, has the potential to induce forecasts for a QE reduction. If so, considerable downside risks would be posed to fixed income. However, a very large beat on expectations would be required for the US 10-year yield to reach the 2.75% level seen during last week’s Washington turmoil.

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