Friday's jobs report takes on huge importance as it is the final word on the US labor market before the Federal Reserve's huge monetary policy meeting on December 15-16.
With the Federal Open Markets Committee appearing to be inching closer to hiking rates for the first time since June 2006, a decent gain in jobs could help to end this era of extraordinary easy monetary policy.
Wall Street's top economists have weighed in with their expectations for both the gain in jobs and the direction of the unemployment rate.
The consensus forecast is 200,000 jobs added in November and for the unemployment rate to stay unchanged at 5.0%. This comes after an unexpectedly strong addition of 271,ooo jobs in October.
Importantly, most economists expect that the report should keep the Fed on track for the rate hike at its upcoming meeting, unless there is a catastrophic downside surprise.
"To derail lift-off, you would need a number that would make you think the economy is weakening quickly. To my mind that would be 120k or less, combined with a very big downward revision to last month’s 271,000," said Citi's Steve Englander.
We've compiled all of the guesses below, along with a short comment from the economists on why their thinking.
Brian Jones, Societe Generale:
- NFP payroll gain: 225,000
- Unemployment rate: 4.9%
- Comment: "Our analysis suggests that the latest readings on job creation and unemployment will move ever closer to levels that Committee members judge consistent with the labor-market side of the Federal Reserve’s dual mandate, supporting our call for a liftoff in administered rates at their next gathering," said Jones
Paul Mortimer-Lee, BNP Paribas:
- NFP payroll gain: 170,000
- Unemployment rate: 5.0%
- Comment: "Following October’s surge, we are unlikely to see a print that would deter the Fed from delivering a rate hike in December," said Mortimer-Lee.
Scott Brown, Raymond James:
- NFP payroll gain: 185,000
- Unemployment rate: 5.0%
- Comment: "The unemployment rate is reported accurate to ±0.2%, which means we could easily see a drop below 5% in November, but the broader range of labor market indicators have been consistent with a further reduction in labor market slack (a key factor in the Fed’s decision to tighten)," said Brown.
Ted Wieseman, Morgan Stanley:
- NFP payroll gain: 205,000
- Unemployment rate: 5.0%
- Comment: "Even if the recovery in hiring rates has been sustained, jobless claims came up somewhat from the October lows in November, and higher consumer confidence in job finding prospects may boost the quit rate, which has been stalled since the spring," said Wieseman.
Lindsey Piegza, Stifel:
- NFP payroll gain: 190,000
- Unemployment rate: 5.1%
- Comment: "This would be a marked slowdown from October’s outsized rise of 271k, pulling the three-month average into a range of 199k to 203k (assuming no downward revisions to October)," said Piegza.
James Sweeney, Credit Suisse:
- NFP payroll gain: 205,000
- Unemployment rate: 5.0%
- Comment: "A payroll gain in line with our forecast probably would meet the FOMC's 'some further improvement' criterion for the expected December potential rate hike, especially if other data in the employment report also point to a tightening labor market," said Sweeney.
Steve Englander, Citi:
- NFP payroll gain: 210,000
- Unemployment rate: 5.0%
- Comment: "To derail lift-off, you would need a number that would make you think the economy is weakening quickly. To my mind that would be 120k or less, combined with a very big downward revision to last month’s 271k," said Englander.
Michael Gapen, Barclays:
- NFP payroll gain: 200,000
- Unemployment rate: 4.9%
- Comment: "The broad-based rebound in job growth seen in October suggests that the August/September slowdown in hiring was transitory, and we expect payroll growth to return to its prior trend in the months ahead," said Gapen.
Ward McCarthy, Jefferies:
- NFP payroll gain: 230,000
- Unemployment rate: 5.0%
- Comment: "We think that the rebound in October payrolls is probably a better reflection of the overall pulse of the labor market but also overstates payroll trends somewhat. Our November projection is closer to what we think is the underlying trend," said McCarthy
Paul Ashworth, Capital Economics:
- NFP payroll gain: 220,000
- Unemployment rate: 5.0%
- Comment: "On balance, the various labor market indicators we track suggest labour market condition remain healthy," said Ashworth.
Tom Porcelli, RBC Capital Markets:
- NFP payroll gain: 230,000
- Unemployment rate: 4.9%
- Comment: "Our view remains that the ramp-up in holiday hiring plans will help boost payrolls back above the recent trend over the course of Q4," said Porcelli.
Ian Shepherdson, Pantheon Macroeconomics:
- NFP payroll gain: 200,000
- Unemployment rate: 5.0%
- Comment: "The change in payrolls is the difference between the change in gross hiring and the change in gross firings, so the very low pace of layoffs is helping maintain the rapid pace of job growth," said Shepherdson.
Jim O'Sullivan, High Frequency Economics:
- NFP payroll gain: 190,000
- Unemployment rate: 5.0%
- Comment: "We expect another fairly strong rise in payrolls in the employment report on Friday. However, if the data disappoint, Fed officials are likely to focus on the strong trends," said O'Sullivan.
Ethan Harris, Bank of America-Merrill Lynch:
- NFP payroll gain: 180,000
- Unemployment rate: 5.0%
- Comment: "Given notable seasonality in retail trade jobs, there is always additional uncertainty around that forecast. But given the recent sluggish 3-mo trend of 18,000, there is likely capacity for hiring heading into the holiday shopping season."
Sam Bullard, Wells Fargo:
- NFP payroll gain: 210,000
- Unemployment rate: 5.0%
- Comment: "Broad based private sector hiring should continue, with particular focus on mining, manufacturing and retail for clues to current activity performance within each sector," said Silvia.
Millan Mullraine, TD Securities:
- NFP payroll gain: 170,000
- Unemployment rate: 5.0%
- Comment: "This is broadly consistent with the positive tone in the array of ancillary employment indicators which suggests that the US labor market recovery is back on track, though the brisk 271K surge in jobs growth in October is unlikely to be sustained going forward," said Mullraine.
David Mericle, Goldman Sachs:
- NFP payroll gain: 170,000
- Unemployment rate: 5.0%
- Comment: "While a gain of 200k would be a bit softer than the recent average, it would still be well above our estimate of the “breakeven” rate of 85k per month," said Mericle.
Joe LaVorgna, Deutsche Bank:
- NFP payroll gain: 150,000
- Unemployment rate: 5.1%
- Comment: "It is worth noting that seven out of the last nine payroll reports have been revised lower. Often times the direction of revisions tells us about the underlying momentum in the economy," said LaVorgna.
Gus Faucher, PNC :
- NFP payroll gain: 190,000
- Unemployment rate: 5.0%
- Comment: "Job growth slowed in November after a very strong October, but remains well above the pace needed to keep up with underlying labor force growth," said Faucher.
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