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November Payrolls Preview: The Final Jobs Report Before Fed Decision

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The US nonfarm payrolls report covering the month of November will be released today, on December 2nd 2016 by the Bureau of Labor Statistics at 12:30 GMT. The consensus estimates for the month of November are as follows:

  • Monthly Nonfarm payrolls: 165k
  • Unemployment rate: 4.90%
  • Average hourly earnings m/m: 0.20%

Previous (October 2016 NFP Report)

  • Monthly Nonfarm payrolls: 161k vs. 174k
  • Unemployment rate: 4.9% vs. 4.90%
  • Average hourly earnings m/m: 0.40% vs. 0.30%
  • Average hourly earnings y/y: 2.8% vs. 2.6% previously

US Unemployment Rate

US Unemployment Rate: 4.9%, October 2016
US Unemployment Rate: 4.9%, October 2016

In October, the US economy added 161k jobs, which was lower than the median estimates of 174k, according to data from the US Bureau of Labor Statistics. The US unemployment rate fell to 4.9%, after rising briefly to 5.0% the month before.

Although October’s payrolls were lower than expected, the market saw the print as positive. Since early November and after the US election outcome, the markets have been steadily pricing in a Fed rate hike in December for 25 basis points. The bar for the payrolls data is very low, meaning that even a 100k+ jobs is sufficient enough to support the view for a rate hike this month.

In October, wages posted a strong increase, rising 0.4% on a month over month basis. This was above the median forecasts of 0.3% and extended the gains from 0.2% previously. On an annualized basis, average hourly earnings increased from 2.6% to 2.8% in October.

November ADP Payrolls: 216k vs. 161k

Change in Private Nonfarm Employment (November 2016): 216k
Change in Private Nonfarm Employment (November 2016): 216k

Wednesday’s ADP private payrolls data showed a solid print as the private sector added 216k jobs during November. This was significantly higher than the forecasts of 161k. October’s payrolls were revised lower to show 119k, lower than the initial print of 147k.

The services sector continued to outperform, adding 228k jobs while the goods producing sector shed 11k jobs. Manufacturing, natural resources & mining posed a drag, shedding 14k jobs with construction sector seen adding 2k during the period.

November 2016 Payrolls Estimates

The November payrolls report is expected to show the US economy adding 165k jobs. This is slightly higher from the 161k print seen the month before.

The U.S. unemployment rate is expected to remain steady at 4.9% while average hourly earnings on a month over month basis is expected to rise 0.2%, down from 0.4% increase seen the month before.

The general consensus is, however, an expectation of a near 200k payrolls with the unemployment rate likely to remain steady at 4.9% while average hourly earnings are expected to remain at 0.2%.

Here are the general views and opinions about today’s payroll report from major institutions.

Credit Suisse

Economists at Credit Suisse expect job gains to remain near the recent trend and expect to see 170k jobs for November and maintain that the average hourly earnings will remain steady at 2.8%. “Thanks to a recent acceleration in wage growth, aggregate private labor income growth has returned to its post-crisis trend of 4.4%. Average hourly earnings growth should slow somewhat after two strong months, but we expect YoY growth to remain steady at 2.8%,” Credit Suisse says.


Economists at SMRA are bullish on the November payrolls report. They estimate that payrolls could rise 200k and warn that the upside risks are more than the downside. “We anticipate a rebound in east coast payrolls in the November payroll accounting.” SMRA economists also expect the unemployment rate to hold up at 4.9% noting that “the decline to 4.9% in October from September reflected a decline in the labor market participation rate, which is not likely to occur again in November.”


Nordea noted that this is the last jobs report before the December FOMC meeting. Analysts forecast payrolls to rise 165k, in line with October’s 161k increase but lower than the 181k average gain seen this year. “Given Fed officials’ estimates of a “break-even” rate – the pace of job growth how many jobs are needed to keep unemployment steady – ranging from 70k to 150k per month, they will probably see anything stronger than a 150k rise in payrolls as consistent with a healthy labour market,” analysts note.

On the unemployment rate, Nordea expects the unemployment rate to fall to 4.8%, while expecting the average hourly earnings to hold at 2.8% on a year over year basis.

Morgan Stanley

Analysts at Morgan Stanley are expecting to see a 200k gain in payrolls with an unchanged unemployment rate of 4.9% and a 0.1% rise in the average hourly earnings bringing the year over year increase to 2.7%.

Analysts at MS note that the “state level employment data indicate that the mass evacuations and flooding caused by Hurricane Matthew, which hit during the employment report survey week in October, were a meaningful drag on October payrolls. Combined nonfarm payrolls growth in Florida, North Carolina, South Carolina, and Georgia slowed to 8,000 in October from 61,000 in September and a recent trend around 45,000. That drag should reverse and boost November payrolls by a decent amount, supported a shift to unusually mild weather across the country in the first half of November through the survey week.”

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