October Payroll Projections

Investing.com — October payrolls may show a smaller-than-expected increase of 100,000 jobs due to the combined impacts of Hurricane Milton and the recent Boeing (NYSE:BA) strike, according to Bank of America (BofA) economists.

According to their estimates, these events likely reduced payrolls by about 50,000 positions.

> BofA economists led by Aditya Bhave: “Note that Governor Waller pointed to a larger drag of ~100k in recent comments. The hurricane also likely lowered hours worked and, as a result, raised average hourly earnings growth.”

The unemployment rate is expected to rise back to 4.2%, partly due to hurricane distortions.

BofA projects a 0.3% rise in nominal personal income for September, supported by job and wage growth, though this is partially offset by fewer hours worked.

They expect nominal and real spending to climb by 0.5% and 0.3%, respectively, while the saving rate is projected to dip slightly to 4.7%.

Core PCE inflation is forecasted to register at 0.27% month-over-month, with the annual rate easing by a tenth to 2.6%.

> Economists: “Although the y/y rate should fall a tenth to 2.6%, this wouldn’t be an ideal print for the Fed and would likely concern the hawks. But we look for softer figures in 4Q.”

Alongside the nonfarm payrolls data, the ISM manufacturing PMI will also be significant, with expectations of an increase from 47.2 to 47.6 in October.

With the Fed shifting its focus more toward the jobs market than inflation, weaker payroll numbers could push the outlook back toward a more dovish stance.