The US Federal Reserve has done what it can to prime the global markets for the possibility of an increase in short-term interest rates next month. The question now is whether the economic data co-operate.

The Fed looks at a broad panorama of indicators when making its decisions, but there is little doubt that the next two jobs reports are critical — with October’s readout due on Friday at 8.30am eastern standard time.

Janet Yellen, who chairs the Fed, has hung a central part of her case for higher rates on the improvements being seen in the US jobs market. A sudden setback now would once again call a move into question.

As Dennis Lockhart, the Atlanta Fed president, said on Thursday, even a small adjustment in forecasts or estimates for variables such as the neutral rate of interest could prompt a decision to keep rates on hold. A key question is just how strong the jobs figures need to be to keep the Fed on track for a rate rise.

So what number will the Fed be looking for?

Economists surveyed by Bloomberg think employers added about 180,000 workers in October, following increases of 142,000 in September and 136,000 in August. That would put the three-month average at just over 150,000 — a fair way below the average in the first half of the year, which was just over 210,000.

However, Fed policymakers have signalled that they do not need to see job gains above the 200,000 mark to feel confident that the labour market is on track with spare capacity diminishing. John Williams, the San Francisco Fed chief, said in a September speech that the US would need at most 100,000 new jobs a month for stable growth.

In practice, Fed policymakers would be troubled by a number that low. Many will be looking for a figure above 150,000.

What about the unemployment rate?

Forecasters are looking for a 5 per cent jobless rate, according to the Bloomberg survey. A historical look shows that in previous cycles the Fed started hiking well before unemployment reached this low a level. However, a litany of factors, including the hangover from the Great Recession, have thus far stayed the Fed’s hand.

Ms Yellen said in a speech in September that other indicators suggested that the unemployment rate currently understated how much slack remained in the labour market, given low labour force participation and the large number of people working part-time who want full-time work. Still, she added that the economy was probably “no longer far away from full employment”.

The unemployment rate, which peaked at 10 per cent in 2009, is now 5.1 per cent, which is only slightly above the 4.9 per cent level that Fed policymakers see as the longer-run normal level.

How are wages doing?

While there have been plenty of anecdotal reports of accelerating wages — for instance, Walmart said last month that pay increases would eat into its profits next year — the national data have been relatively muted.

Economists are looking for growth in average hourly earnings of about 2.4 per cent on the year, compared with 2.2 per cent in the previous jobs report. That said, the Fed has not set an acceleration in wages as a precondition for interest rate increases.

What other indicators are relevant?

Economists will be looking at alternative unemployment readings that offer a broader measure of underutilisation of labour. For example, the so-called U-5 unemployment rate includes both the unemployed and the marginally attached, who want a job and are available for a job but not looking for work currently.

This was 6.2 per cent in September, down from 7.3 per cent at the same time last year. The U-6 measure includes people who are part-time but would like a full-time post. This is at 10 per cent, which is still somewhat higher than the 9.5 per cent rate prevailing when the Fed last kicked off a rate-hiking cycle in 2004.

This week, Mr Lockhart mentioned another measure of labour force utilisation developed by his staff, called the ZPOP ratio. This estimates the share of the population working the hours they wish. By this measure, 8 per cent of the working-age population is underutilised — well below the cyclical peak of 15 per cent in early 2010, but just above the cyclical trough of 7 per cent back in 2006.