How much is nonfarm employment expected to rebound in October?

  • Goldman Sachs expects US nonfarm employment to increase by 75 thousand people in October, above the market consensus of 65 thousand and the average of 51 thousand over the previous three months; private-sector employment is expected to rise by 70 thousand, compared with a market consensus of 64 thousand.
  • Nonfarm employment increased by only 29 thousand people in September. Goldman Sachs notes that this year Labor Day falls on 7 September, a relatively late date; in similar years in the past, September employment growth was typically weaker than the recent trend, followed by an average acceleration of about 50 thousand people in October compared with September.

Which data support stronger employment growth?

  • Layoffs remain low: during the reference period for the October nonfarm payrolls report, initial jobless claims averaged 198 thousand people, below September's 204 thousand; the layoff rate in the September Job Openings and Labor Turnover Survey fell by 0.1 percentage points to 1.0%.
  • The alternative employment indicators tracked by Goldman Sachs imply average job gains in October of about 70 thousand people, slightly above the market expectation of 65 thousand nonfarm payroll gains.
  • However, employer surveys sent a weaker signal: the employment components of Goldman Sachs's manufacturing and services survey indicators fell to 52.6 and 50.8, respectively, in October. Goldman Sachs believes these surveys have been less informative about employment data since the pandemic, so it assigns them limited weight in its forecast.

How will the unemployment rate and wages change?

  • Goldman Sachs expects the unemployment rate in October to be unchanged at 4.2% after rounding, in line with the market consensus; however, continuing jobless claims imply a lower unemployment rate, so the bank sees risks to the actual reading as skewed lower.
  • Measures beyond the unemployment rate indicate that labor-market slack remains. Goldman Sachs's tracker, based on a composite of ten labor-market slack indicators, has declined in recent months but remains at 4.6% on an unemployment-equivalent basis, above the current unemployment rate.
  • Goldman Sachs expects average hourly earnings to rise 0.3% month over month in October, in line with the market consensus, with calendar effects neutral. The bank's composite wage tracker rose at an annualized quarterly rate of 3.0% in the third quarter and 3.3% year over year.