JOBS REPORT — What you need to know in markets on Friday

After stocks surged to another record on Thursday, investors will turn their attention on Friday to the all-important US jobs report from the government.

Expectations are that impacts from hurricanes Harvey and Irma will keep headline payroll gains muted, while the unemployment rate should hold near a post-crisis low. Investors will also get an update on consumer credit balances in August, which were expected to rise by $15.5 billon, less than the prior month.

On Thursday, the S&P 500 hit a record for the sixth-straight day, the longest streak of record highs for the benchmark index since June of 1997.

September jobs preview

The big story in Friday’s jobs report will be hurricanes.

Wall Street is looking for nonfarm payrolls to rise by 80,000 in September, about half the number of the jobs added in August and what would be the lowest monthly total for job creation since March.

The unemployment rate is expected to remain at 4.4% while average hourly earnings should rise 0.3% over the prior month and 2.5% over the prior year.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 4, 2017. REUTERS/Brendan McDermid

This lower total of jobs added is expected to be a direct result of lower hiring due to disruptions caused by hurricanes Harvey and Irma, which impacted Texas and Florida during September. Earlier this week, research institute ADP released its monthly data on private payrolls which showed 135,000 jobs were added during the month, well below the prior month.

Ian Shepherdson, an economist at Pantheon Macroeconomics, notes that the ADP’s model heavily relies on data from the prior month, and so likely overstated the strength in hiring during September.

“Past experience suggests that a payroll reading of about 75,000 would be consistent with historical experience, the jobless claims numbers in recent weeks, and the ADP report, insofar as we can extract information from it about the hiring and firing behavior of firms which use ADP for payroll processing,” Shepherdson wrote in a note to clients on Thursday.

Hurricane Irma struck the Florida Keys as a Category Four storm earlier this month, before making its way north through the southern US state (AFP Photo/SAUL LOEB)

Over at Deutsche Bank, Brett Ryan and Matt Luzzetti see nonfarm payrolls rising by just 50,000, noting that in September 2005 payrolls dropped by 35,000 after Hurricane Katrina, which hit fully two years before the economy started rolling over. Deutsche Bank notes that it took until November for job growth to recover back then.

Overall, most economists see Friday’s jobs number as an even bigger wild card than any one month’s data usually is. Which makes it likely that a noisy headline number will be released on Friday as investors note that the Federal Reserve has made clear their plans to look past any distortions because of the hurricane.

In a way, then, the most interesting economic data of the month will probably be a bit of a wash and isn’t likely to change the outlook for markets or policymakers.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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