Thursday, June 04, 2015

NFP: Goldman Sachs, Nomura May Employment Previews

by Bill McBride on 6/04/2015 10:42:00 AM

Yesterday I discussed several indicators: Preview: Employment Report for May

Some excerpts from a research piece by Goldman Sachs economist Kris Dawsey:

We forecast a 210k gain in nonfarm payrolls in May, a bit below consensus of 226k and down slightly from April's pace of increase. ... the trend in payroll job growth seems to have softened a bit since reaching a high-water mark in late-2014 / early-2015.
...
We expect the unemployment rate to remain unchanged at 5.4%. ...

Average hourly earnings (AHE) for all employees will probably increase 0.3%, in our view. As we have noted in the past, the monthly earnings estimates appear to be influenced by calendar effects. The smaller number of working days in May, combined with relatively late timing of the survey reference week within the month, would historically be consistent with a firm AHE print. Including base effects, we think that the year-on-year change in all-employee AHE is likely to remain stable at 2.2% (with upside risk), while year-on-year growth in production and nonsupervisory AHE will probably rise one-tenth to 2.0%.
And from economists at Nomura:
[W]e forecast a 185k increase in private payrolls, with a 5k increase in government jobs, implying that total nonfarm payrolls will gain 190k. ... We forecast that average hourly earnings for private employees rose by 0.28% m-o-m in May, indicative of our expectation for a gradual pickup in wage growth as a result of the tightening labor market and a rebound after a slight 0.1% increase in April. Last, we expect the household survey to show that the unemployment rate remained unchanged at 5.4%.