Thursday, September 01, 2016

Goldman's August NFP Preview

by Bill McBride on 9/01/2016 05:37:00 PM

A few excerpts from Goldman Sachs' August Payroll Preview by economist Elad Pashtan:

We expect a 165k increase in nonfarm payroll employment in August, below consensus expectations for a 180k gain. ...

The unemployment rate is likely to decline to 4.8%, while average hourly earnings were likely flat in August and up 2.3% over the past year.
...
Our below-consensus forecast primarily reflects seasonal quirks specific to the August payroll period. Since 2011, August payroll growth has fallen short of Bloomberg consensus expectations by an average of 49k, only to be revised up by an average of 71k in subsequent releases. Industry-level payroll data indicate that the education sector (specifically, education services and state & local government employment, the latter largely reflecting public schools) accounts for much of the upward revision, which mostly occurs from the first to the second estimate of payroll growth. In our view, the initial August weakness and subsequent revisions reflects seasonal adjustment challenges related to shifts in the timing of school calendars. Since this pattern failed to hold last year, we are estimating a more conservative 20k impact this year.
emphasis added