The median estimate is for the headline non-farm payrolls number to come in at 85K, with the unemployment rate holding steady at 4.3% again. Normally, there would be a lot at stake when we get to the US jobs report. However, this time things are somewhat different as the Fed’s expectations are mostly drowned out by US-Iranian developments.
As things stand, traders do not expect any interest rate changes from the Fed this year. Of course, the situation remains fluid. But the fact of the matter is that until there is more clarity on the US-Iran conflict and/or inflation developments, the Fed cannot feel confident in pre-committing to a particular rate path just yet.
With this in mind, today’s US jobs report will have less impact on the overall outlook. But instead, this will be just another economic data point to scrutinize the overall health of the US economy and the overall risk sentiment. However, this does not mean that we should rule out the potential impact on the markets before the weekend.
So, let’s take a look at what analysts are expecting ahead of today’s data release.
Bank of America
– Non-farm jobs: 95 thousand, unemployment rate: 4.3%
– “We are looking at another upside non-farm payrolls surprise with risks to the upside, and an unchanged unemployment rate at 4.3%. Education and health should continue to lead.” Warm weather is likely to support entertainment, hospitality and construction for the third month in a row. “Risks are tilted towards the upside, with claims remaining benign and weekly ADP data strong.”
– Fed will remain ‘comfortably stable’, threshold for rate hikes is unemployment rate close to 4.0%
– “The US dollar has been paralyzed by geopolitical headlines lately, but a strong report could reaffirm that.”
h/t @ MNI Markets
Goldman Sachs
– Non-farm jobs: 60 thousand, unemployment rate: 4.3%
– “We expect a 60K increase in payrolls (vs. 89K expected) in May. Big data indicators of job growth have slowed, and the government is likely to have a net slowdown of 5K. We expect the unemployment rate to remain unchanged at 4.3%.”
– “The May unemployment rate appears to have modest residual positive seasonality, and the rounding barrier to 4.4% is not high from 4.34% in April.”
JP Morgan
– Non-farm jobs: 75 thousand, unemployment rate: 4.3%
– “Our private payrolls forecast of 85K is slightly above the private payroll trend over the past six months (68K), although it is fully in line with the YTD average.”
– “We believe break-even payroll is still less than 50k per month and may be closer to zero.”
– “May payrolls have been revised downward in the last few years between the first and third editions (as have been the case in several months), so the initial view may eventually be revised downward. For April and March, there is no strong revision pattern.”
– “The unrounded unemployment rate was 4.337% in April, so there is a low bound to round it to 4.4%. However, we see risks skewed more towards 4.2%.”
Morgan Stanley
– Non-farm jobs: 65 thousand, unemployment rate: 4.3%
– “We expect payrolls to rise by 65K, and private payrolls to rise by 75K. Federal government layoffs continue to be a drag on major payrolls, and we are also incorporating drags on private payrolls from the transportation sector.”
– “While overall labor market conditions may not have changed much, there were some particular pressures in May. We estimate that airline bankruptcies lead to 10,000 layoffs – warning notices totaling about 8,000, and some fallout is likely.”
– “We also expect a continued decline in trucking payrolls of approximately 10,000 per month as the Federal Department of Transportation has called for the revocation of commercial driver’s licenses for those without US residency.”
– “For the household survey, we expect another 4.3% unemployment rate (still on the cusp of 4.2%) and an unchanged labor force participation rate. Average hourly earnings are likely to rise 0.3% month-on-month, and the 12-month pace slows by 0.1 basis point to 3.5% year-on-year.”
