Thursday, December 03, 2015

Goldman: November Employment Preview

by Bill McBride on 12/03/2015 12:10:00 PM

A few excerpts from a piece by Goldman Sachs economist David Mericle:

We expect a 200k gain in nonfarm payroll employment in November, in line with consensus expectations. ... Labor market data were mixed in November. ADP employment growth surprised on the upside and the employment components of manufacturing surveys were somewhat stronger on balance, but the Conference Board’s measure of reported job availability declined, jobless claims rose slightly, and the ISM non-manufacturing index’s employment component declined. While a gain of 200k would be a bit softer than the recent average, it would still be well above our estimate of the “breakeven” rate of 85k per month.

We expect the unemployment rate to remain unchanged at 5.0% in November on a rounded basis following a decline last month to 5.036%. However, we see some risk that the unemployment rate will round up to 5.1% given the high unrounded level and the possibility of a slight rebound in participation, which appears a bit low after unexpectedly sharp declines earlier this year. ...

Finally, we expect average hourly earnings for all workers to rise 0.2% in November following a larger-than-expected 0.4% gain in October, implying a two-tenths decline in the year-on-year rate to 2.3%. ... Our wage tracker—which also now includes the Atlanta Fed wage measure—stands at 2.6%. Apart from a technical blip in late 2012, this is the highest reading of the recovery, although it is still somewhat below our 3-3.5% estimate of the full-employment equilibrium rate.