What is the distribution of forecasts for the US NFP?

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Why it’s important?

In the Asian session, Eamonn published the range of estimates for today’s US NFP report. These ranges are
important in terms of market reaction because when the actual data deviates from the
expectations, it creates a surprise effect. Another
important input in market’s reaction is the distribution of forecasts.

In fact, although we can have a range of
estimates, most forecasts might be clustered on the upper bound of the
range, so even if the data comes out inside the range of estimates but
on the lower bound of the range, it can still create a surprise effect.

Distribution of forecasts

Non-Farm Payrolls

  • 0K-200K range of estimates
  • 75K-150K range most clustered
  • 113K consensus

Unemployment Rate

  • 4.3% (3%)
  • 4.2% (29%)
  • 4.1% (65%) – consensus
  • 4.0% (3%)

Average Hourly Earnings Y/Y

  • 4.3% (3%)
  • 4.2% (6%)
  • 4.1% (19%)
  • 4.0% (63%) – consensus
  • 3.9% (9%)

Average Hourly Earnings M/M

  • 0.6% (3%)
  • 0.5% (3%)
  • 0.4% (14%)
  • 0.3% (70%) – consensus
  • 0.2% (10%)

Average Weekly Hours

  • 34.3 (15%)
  • 34.2 (57%) – consensus
  • 34.1 (26%)
  • 34.0 (4%)

As a reminder, this is going to
be a tricky report given the distortions from hurricanes and strikes in
October. Thankfully, the market and the Fed are unlikely to care that much given the distortions and the focus
on the US election on Tuesday.

Therefore, I expect a weak report to be “forgiven”, while a strong one would just confirm that the labour market is still doing good and add to the expectations that the Fed might be forced to pause its easing cycle earlier than expected in 2025.

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