Significant job growth can support the USD
The US Bureau of Labor Statistics (BLS) will release the October jobs report on Friday, November 4, while just two days ago, we had FOMC monetary policy meeting, where Fed officials confirmed that the US labor market improvement was significant and acceptable.
For September, the consensus expectation of 250,000 jobs, was beaten by 63,000 more than expected. In addition, the forecast for October stands at 200,000 jobs, indicating a 63,000 lower score than the previous month. The expected Average Hourly Earnings are expected to stay unchanged at 0.3%, while Unemployment Rate supposes to increase to 3.6% from 3.5% prior, assuming the participation rate stayed put at 62.3%.
Last year labor market growth was much better with 562K per month. In the first half of 2022, the average growth was 444K new jobs per month. In the second half, the growth rate was not as good as in the first half, especially in the fourth quarter. Initial jobless claims growth in October included the impact of Hurricane Ian, and claims remained elevated into the payrolls survey reference week, suggesting that hiring could increase at a slower pace, and we may even see the numbers lower than 200K expectations. Earlier this week in the Conference Board’s labor report, we saw the softening in job openings in recent months with September JOLT also under 11K at 10.717M, which can confirm the increasing number of unemployment benefits applications. However, 239K increase seen in October ADP Nonfarm Employment tells us that we can be confident in the strength of the labor market. However, we expect a further slowing in next year's labor market, as demand cools further.
In short, according to all signs, the consensus expectation is positive for the NFP numbers, and it can be another confirmation of the acceptable state of the US economy at the current stage and further strengthening of the dollar.
