US October Nonfarm Payrolls Preview: Can Employment Rebound? US Stocks, Dollar and Gold Face Key Test

Recent leading indicators suggest that the U.S. labor market improved somewhat from September, though the overall pace of hiring remains sluggish.

ADP data released Wednesday showed that U.S. private-sector employment increased by 86,000 in October, exceeding market expectations of 69,000, while the September figure was revised to 86,000. Although there is no consistent one-to-one correlation between ADP and official nonfarm payrolls, the latest results indicate that private-sector hiring has not deteriorated further.

The JOLTS report also signaled some resilience, with U.S. job openings rising by 333,000 to 7.523 million in September, lifting the ratio of job openings to unemployed workers from 1.02 to 1.06; layoffs fell to 1.641 million, the lowest since March 2025. Meanwhile, recent initial jobless claims have hovered near historic lows around 200,000, suggesting that while businesses are hiring cautiously, large-scale layoffs have not emerged.

For the upcoming nonfarm payrolls report, job growth of around 50,000 to 70,000, an unemployment rate holding at 4.2%, and month-over-month wage growth of 0.2% to 0.3% would align closely with the current employment landscape of "low hiring, low firing." Barclays forecasts October job gains of about 50,000 and expects the unemployment rate to tick down slightly to 4.1%, while some institutions predict figures near 100,000, pointing to continued market divergence.

At its October meeting, the Federal Reserve kept the federal funds rate at 3.75% to 4.00%, while continuing to emphasize that inflation remains elevated. In September, the PCE price index rose 3.6% year over year, and core PCE climbed to 3.1%, well above the 2% inflation target. Currently, interest rate futures indicate that the market still prices in an approximately 80% probability of a 25-basis-point rate hike in December.

Against this backdrop, if nonfarm payrolls significantly exceed 100,000 and month-over-month wage growth reaches 0.3% or higher, expectations for a December rate hike will be further reinforced; if job gains fall below 30,000 or even turn negative, accompanied by an unemployment rate rising above 4.3%, the market may reassess the need for the Fed to continue tightening policy.

For US stocks, a "mild recovery" in employment may be a relatively favorable outcome. If nonfarm payrolls land around 50,000 to 70,000, it would indicate that the economy has not significantly deteriorated without noticeably adding to wage and inflation pressures. Consequently, US Treasury yields could remain stable, which would be relatively beneficial for high-valuation sectors such as the Nasdaq, AI, and semiconductors. If job growth significantly exceeds 100,000 accompanied by accelerating wage growth, expectations of a December rate hike could heat up, and rising Treasury yields would once again weigh on tech stock valuations. Conversely, if nonfarm payrolls significantly miss expectations, US equities may benefit in the short term from easing rate-hike expectations, but will subsequently need to face concerns over slowing consumption and corporate earnings.

For the US dollar, if October nonfarm payrolls come in significantly stronger than the market expectation of 65,000, especially if the unemployment rate remains at 4.2% or drops further while wages rise by more than 0.3% month-over-month, the dollar could regain support. Strong employment would reinforce US economic resilience as well as expectations of a Federal Reserve rate hike in December. Currently, the market still prices in a more than 80% probability of a December rate hike, so the dollar may be relatively sensitive to the employment data. If payroll gains fall well short of expectations and the unemployment rate rises above 4.3%, US Treasury yields and rate-hike expectations could decline in tandem, leaving room for further correction in the dollar.

Gold Price Daily Chart, Source: TradingView

For gold, if nonfarm payrolls come in stronger than expected, especially with hotter wage data, rising expectations of a Federal Reserve rate hike in December could push the US dollar and Treasury yields higher, putting pressure on gold and potentially testing support near 4,080. If employment significantly misses expectations and the market dials back rate-hike bets, it would favor a pullback in the dollar and yields, potentially giving gold prices further rebound momentum to continue testing resistance at $4,200. However, if nonfarm payrolls merely meet expectations of around 60,000 to 70,000, gold's performance may depend more on average hourly earnings and the market's repricing of the December policy path.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.