Thursday, May 07, 2015

Goldman Sachs April Employment Preview

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

Some excerpts from a research piece by Goldman Sachs economist David Mericle:
We expect nonfarm payroll job growth of 230k in April ... We expect the unemployment rate to decline by one-tenth to 5.4% and average hourly earnings to rise 0.2%.
Based on our method for estimating the payrolls effect of deviations in weather conditions from seasonal norms, we expect that warmer temperatures should be a substantial positive factor for April payrolls. The weeks leading into the March reference week were much colder than usual, while the weeks leading into the April reference period were quite a bit warmer than usual. Furthermore, the change in employment in both the construction and leisure and hospitality industries was about 30k below trend in March.
We also see some upside risk to our baseline forecast from a calendar effect. There were five rather than four weeks between the reference weeks for the March and April payrolls surveys this year. While the relevant history is limited and the BLS's seasonal adjustment procedure does attempt to control for the four-versus-five week effect, we have found that five-week Aprils tend to see above-trend payroll growth. Moreover, we have found that this calendar effect is not fully captured by other employment-related data. We expect an unusually large and positive calendar effect this month.

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