US Non-farm payrolls preview – Goldman Sachs

Economists at Goldman Sachs offers insights on their expectations from the upcoming US payrolls data, which will be reported at 1230GMT today.

Key Quotes:

“We estimate nonfarm payrolls increased 170k in May, a moderate slowdown from April's +211k pace and modestly below the three-month moving average of +174k. While labor market fundamentals remained broadly stable - featuring a further decline in continuing jobless claims - recent deterioration in service sector employment surveys suggests hiring may be slowing at the margin.

We also believe a favorable swing in the weather between the March and April survey periods suggests the 211k pace of April job growth likely overstates the near-term underlying trend, which we believe is closer to 175k (and should slow further as the economy moves beyond full employment).

Our forecast reflects some softening in service sector employment surveys, a return to normal weather, and a modestly slower pace of hiring in May, reflecting labor supply constraints in an economy near full employment.

We estimate the unemployment rate remained stable at 4.4%, based on our expectation that household employment will hold on to its sharp year-to-date gains.

We expect average hourly earnings to increase 0.2% month over month and 2.5% year-over-year ... reflecting the interaction of firming wage growth with unfavorable calendar effects.”