The ranges of estimates are important in terms of market reaction because when the actual data deviates from the expectations, it creates a surprise effect. Another important input in market’s reaction is the distribution of forecasts.
In fact, although we can have a range of estimates, most forecasts might be clustered on the upper bound of the range, so even if the data comes out inside the range of estimates but on the lower bound of the range, it can still create a surprise effect.
Non-Farm Payrolls
- 70K to 110K range of estimates
- 50K-125K range most clustered
- 85K consensus
Unemployment Rate
- 4.4% (17%)
- 4.3% (76%) – consensus
- 4.2% (7%)
Average Hourly Earnings Y/Y
- 3.6% (3%)
- 3.5% (31%)
- 3.4% (60%) – consensus
- 3.3% (6%)
Average Hourly Earnings M/M
- 0.4% (9%)
- 0.3% (75%) – consensus
- 0.2% (14%)
- 0.1% (2%)
The NFP report, and especially the CPI, are likely to influence the tone at the upcoming FOMC meeting. The US jobs data has been consistently surprising to the upside pointing to a stable and even re-accelerating labour market. The Fed projected a 4.4% unemployment rate in 2026, so we are already below that. Their attention has shifted to inflation as that’s the part of the mandate more in tension now.
The Fed estimates that the NAIRU is around 4.2%, below that level the Fed could be already late with inflation having been above the 2% target for 5 years now. The expectations for rate hikes will highly likely grow stronger.
