Forex Institutional Research: Goldman Sachs NFP Preview
Key quotes from the Goldman Sachs NFP report:
We forecast that nonfarm payroll growth rebounded to +210k in June from just +38k in May. In part the pickup reflects the conclusion of a strike at Verizon Communications—this alone accounts for 70k of the month-over-month swing. However, we also see scope for improvement beyond Verizon, as other labor market data have generally looked encouraging
We expect a small increase in the unemployment rate to 4.8% after its three tenths decline in May. Data from the household survey have been volatile in recent months, but the broad trends—participation stabilizing and job growth remaining strong enough to reduce slack over time—still look intact. We see a low month-over-month gain in average hourly earnings due to calendar quirks, but the year-over-year rate should edge higher.
We forecast that nonfarm payroll employment increased by 210,000 in June, up from a gain of just 38,000 in May. In part the rebound reflects the conclusion of a strike at Verizon Communications: idled workers from this strike subtracted 35,100 from payroll growth in May, and will add back the same amount to payroll growth in June. However, we also see scope for an improvement beyond the effects of the strike. Excluding Verizon, payroll employment growth averaged just 98,000 in April and May—the lowest two-month growth rate since May 2012 (using revised figures, and excluding the effects of Census hiring and other strikes). As other indicators have not shown the same degree of deterioration, we are inclined to think May payroll growth understated current labor market trends, and therefore look for stronger gains in this month’s report.
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