Investing.com -- October payrolls may show a smaller-than-expected increase of 100,000 jobs due to the combined impact of Hurricane Milton and the recent Boeing (NYSE:BA) strike, according to Bank of America (BofA) economists.
Per their estimates, these events likely reduced payrolls by about 50,000 positions.
“Note that Governor Waller pointed to a larger drag of ~100k in recent comments,” BofA economists led by Aditya Bhave said in a Friday note. “The hurricane also likely lowered hours worked and, as a result, raised average hourly earnings growth.”
“Meanwhile, the unemployment rate should move back up to 4.2%, partly due in part to hurricane distortions,” they added.
BofA projects a 0.3% rise in nominal personal income for September, supported by job and wage growth, though partially offset by fewer hours worked.
They expect nominal and real spending will climb by 0.5% and 0.3%, respectively, while the saving rate is expected 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%.
“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,” economists noted.
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.