US: Payroll growth to cool further, expected at 75K – Wells Fargo

On Friday, the official US employment report will be released in the US. Analysts at Wells Fargo forecast a reading of 75K in nonfarm payrolls. According to them Federal Reserve officials expect the labor market to remain strong, with the pace of job gains slower than last year but above what is estimated to be necessary to hold labor utilization steady.

Key Quotes: 

“Incorporating a substantial disruption as a result of the General Motors (GM) strike, we look for the pace of nonfarm hiring to continue to cool in October, adding only 75,000 jobs. That’s a substantial downshift in the pace of hiring from the Q3 average of 156,667.”

“We look for the unemployment rate to tick up to 3.6%.”

“We look for average hourly earnings to rise 0.2% month-over-month in October, which would keep the year-over-year pace steady at 2.9%. Modest productivity growth is helping to keep wage acceleration under pre-recession levels.”

“In the face of increased economic anxiety, firms are taking a cautious approach to hiring (and capex), which we believe will lead to rates of GDP growth below 2% in coming quarters. While the FOMC appears content with the current level of monetary policy accommodation, further deterioration in labor market conditions would prompt officials to consider additional easing measures.”