Nonfarm payrolls week - Nomura

Analysts at Nomura noted the U.S. employment report (Friday) and offered a preview.

Key Quotes:

"The pace of nonfarm payroll growth stepped down in April to below 200k. Labor market indicators for May suggest that labor market momentum is not much changed from April. However, a transitory factor—some of the 30-40k union workers who were on strike—during the month should weigh on payrolls. Indeed, initial jobless claims trended higher through the BLS survey week in May, as some of these works on strike probably applied for unemployment insurance.

Currently, our Private Payrolls tracking estimate points to job growth of around 150– 160k. Taking all of this into account, we forecast that nonfarm payrolls added another 160k workers in May with 5k of those workers coming from the government sector, implying that private payrolls added 155k workers. Based on regional manufacturing surveys, we expect the pace of hiring in the manufacturing sector to remain sluggish and expect that payrolls there increased/decreased by -10k in April.

Note that we will keep a close eye on the ADP employment report on Thursday as it has been relatively good predictor of the official jobs number. Based on the weekly insured unemployment rate from the weekly jobless claims report, we forecast the unemployment rate ticked down by 0.1pp to 4.9% in May. Last, we expect average hourly earnings to grow by 0.2% m-o-m (+2.4% y-o-y)."