Thursday, February 04, 2016

Goldman Payroll Preview: 170K Forecast

by Bill McBride on 2/04/2016 11:03:00 AM

Note: Yesterday I wrote: Preview: Employment Report for January

A few excerpts from a research piece by Goldman Sachs economist Daan Struyven:

January Payrolls Preview We expect a 170k gain in nonfarm payroll employment in January, below consensus expectations of 190k. ... We expect the unemployment rate to remain unchanged at 5.0% in January on a rounded basis ... However, we see some risk that the unemployment rate will round down to 4.9% given our expectation for a strong employment gain and the possibility of a slight decline in participation ...

We expect average hourly earnings for all workers to rise 0.4% (mom) in January following a 0.04% decline in December. Our expectation for a firmer than usual rise in average hourly earnings growth is primarily due to favorable calendar effects. In addition, we estimate that minimum wage increases in about a dozen states could boost aggregate average hourly earnings by about 0.05%. However, even a 0.4% increase in January would result in a decline in the year-on-year rate to 2.3% due to unfavorable base effects.
Struyven also mentions that the annual benchmark revision will be released tomorrow, and the revision will probably show about 200 thousand fewer jobs added over the last year than previously estimated. As I noted yesterday, the preliminary annual benchmark revision showed a downward adjustment of 208,000 jobs, and the preliminary estimate is usually pretty close to final revision.