While rate hikes anytime soon aren’t likely, at yesterday’s post-decision press conference, Fed Chair Powell pretty much ruled out more rate cuts any time soon either.  That guidance hasn’t been unwarranted either as recession fears have started to ebb in recent weeks.  Thursday’s much weaker than expected Chicago PMI report, however, serves as a reminder that the clouds haven’t quite cleared yet.  This will put added significance on tomorrow’s October employment report.  While expectations are already low due to the impact of the GM strike, any downside surprise is unlikely to be greeted well by the market.

Heading into Friday’s Non-Farm Payrolls report, economists are expecting an increase in payrolls of just 85K, which would be a big decline from September’s slightly weaker than expected growth of 136K.  In the private sector, economists are expecting an increase of 80K from September’s reading of 114K.  Job growth in the Manufacturing sector is expected to decline 55K.  For the Manufacturing sector, we haven’t seen that large a decline in payrolls since the middle of 2009, but keep in mind that the impact of the now-ended GM strike is expected to pressure job growth.    Because of the strike, the unemployment rate is expected to rise to 3.6% from September’s ridiculously low reading of 3.5%, and average weekly hours are expected to remain unchanged at 34.4.

Ahead of the report, we just published our eleven-page preview of the October jobs report.  This report contains a ton of analysis related to how the equity market has historically reacted to the monthly jobs report, as well as how secondary employment-related indicators we track looked in October.  We also include a breakdown of how the initial reading for October typically comes in relative to expectations and how that ranks versus other months.

For anyone with more than a passing interest in how equities are impacted by economic data, this October employment report preview is a must-read.  To see the report, sign up for a monthly Bespoke Premium membership now!

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