October jobs data points to uneven labour market ahead of NFP release

Market expectations for the upcoming non-farm payrolls report:

• Forecasts centred on +65,000 jobs (estimates vary from +50,000 to +125,000)

• September came in at +29,000

• August recorded +133,000

• July showed -10,000

• Private-sector projections average +64,000

• The jobless rate is seen staying at 4.2%, matching the prior reading

• The participation rate previously stood at 61.8%

• The underemployment rate (U6) was last at 7.6%

• Average hourly earnings year over year are expected to rise 2.9%, down from 3.0%

• On a monthly basis, average hourly earnings are predicted to increase 0.3%, versus 0.1% before

• Average weekly hours are forecast at 34.4, unchanged from the prior figure

Labour market indicators for October so far:

• The ADP employment report came in at +86,000, matching expectations of +67,000 and the prior +86,000

• ISM services employment rose to 51.4 from 50.1

• ISM manufacturing employment hit 52.4, versus a consensus of 52.0 and the earlier 52.7

• Challenger Job Cuts totalled 43,994, compared with 43,281 previously

• Philadelphia Fed employment registered +9.1, down from +11.8

• Empire State employment came in at +10.3, versus +10.6 prior

• Initial jobless claims during the survey week averaged 194,000, against 196,000 last month

• Revelio Labs reported +26,000, a decline from +68,000 earlier

So far the released figures show a positive tilt, with ADP and both ISM reports pointing upward. However, yesterday's Revelio Labs data drew notice as a soft spot.

Amid equity market turbulence, the probability of a December rate increase has fallen to 73%. The major open question remains how Donald Trump will handle the conflict with Iran. Alongside that, the outlook for artificial intelligence ahead of Anthropic's IPO are the main factors driving markets currently. S&P 500 futures are edging up, but they were also higher yesterday before turning lower.

The US dollar is gaining on safe-haven demand, and a solid payroll report would reinforce the greenback's bid while stoking concerns that the Federal Reserve might need to tighten policy just as the AI trade loses momentum.

BMO observes that "41% of previous unemployment prints for October have been lower-than-expected, 22% have been higher-than-estimates, and 37% have matched the consensus," with a slight negative bias versus forecasts on the top-line number.