Traders are eagerly anticipating the release of the October jobs market report, which is scheduled to be revealed by the Bureau of Labor Statistics on Friday. This report is expected to offer valuable insights into the current state of the labor market, potentially impacting traders’ expectations regarding future interest-rate moves by the Federal Reserve.
In September, private sector businesses in the U.S. added 336,000 non-farm payroll jobs, the highest increase in eight months and well above expectations of 170,000.
Investors will be looking to assess whether labor market tightness continues to exist even after the strong momentum observed during the summer months.
During the latest Federal Open Market Committee meeting, the Federal Reserve indicated that while job gains have slowed compared to earlier in the year, they still remain strong, and the unemployment rate remains low. Policymakers also warned that tighter financial and credit conditions for households and businesses could negatively impact economic activity and hiring in the coming months.
October’s Jobs Report: Economist Expectations
Non-farm payrolls: According to Wall Street economists, NFPs are expected to significantly decrease from 336,000 in September to 180,000 in October. This would be the lowest employment gain since June.
Unemployment rate: It is anticipated that the unemployment rate will remain steady at 3.8%.
Wage growth: Forecasts suggest a decline in average hourly earnings, with year-on-year growth expected to ease from 4.2% in September to 4% in October. This would be the lowest reading since June 2021.
How Did Markets React to Prior Jobs Reports?
The table below provides a brief overview of the three most recent Non-Farm Payrolls (NFP) reports, along with the immediate 1-day percentage fluctuations in three key assets: the SPDR S&P 500 ETF Trust (NYSE: SPY), the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT), and the DXY (U.S. Dollar Index).
Interestingly, the stock market responded positively to the latest NFP readings, which exceeded expectations. On the other hand, the bond market experienced losses as investors saw the strength of the labor market as a potential reason for the Federal Reserve to adopt a stricter monetary stance. The U.S. Dollar Index had mixed reactions to previous NFP data releases.