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5 Feb 2016
US NFP Preview: 13 major banks expectations from the January’s payroll report
We are closing in on the January’s release of US Non-Farm Payrolls data. The following are the expectations as forecasted by the economists and researchers of 13 major banks. After posting a strong number of 292,000 in December, all the 13 major banks are expecting January NFP to cool down within the range of 170K to 245K while the unemployment rate is expected to hover in between 4.9% to 5% range.
Goldman Sachs
We expect a 170k gain in nonfarm payroll employment in January, below consensus expectations of 190k—and a downward revision from our forecast at the start of the week. Labor market indicators were weaker in January, with declines in the employment components of both the ISM manufacturing and nonmanufacturing surveys and rising jobless claims. We also expect some payback from the unusually warm weather and residual seasonality in couriers and messengers’ employment, which boosted payrolls in 2015Q4. The unemployment rate is likely to remain unchanged at 5.0%. Average hourly earnings are likely to rise at 0.4% month-over-month due mostly to calendar effects and a likely small boost from state-level minimum wage hikes.
SocGen
Our analysis suggests that hiring remained robust, underutilization of labor resources diminished and wage gains quickened during the reference period. We expect government statisticians to report that nonfarm payrolls expanded by 245,000 in January – a touch below the autumn quarter’s breakneck 284,000-job pace. Joblessness probably narrowed as well at the beginning of the New Year, leaving the civilian unemployment rate at the 4.9% level that monetary policymakers’ generally associate with full employment. Oft-discussed calendar quirks associated with the termination date of the establishment survey, combined with scheduled increases in state minimum wage rates, suggest that average hourly earnings jumped by 0.4% in January – the largest gain since last August. The mean work span of all private workers is forecast to clock in at 34.5 hours for a third straight month.
RBS
The three-month moving average of US non-farm payroll growth surged to +284K in December, its highest since January 2015. But while we expect labor market gains to continue at a solid pace, that trend may prove unsustainable into January. Our trading desk economists forecast non-farm payroll growth of 180K in January, slightly below the listed consensus and well below December’s 292K surge. Less supportive base effects in January may mean that the average hourly earnings growth rate in January dips from 2.5% y/y to 2.2% y/y, even though our economists look for a relatively firm +0.3% m/m advance in earnings. The unemployment rate may dip below 5.0% for the first time since 2007 (RBSe 4.9%).
Nomura
Our forecast, if realized, would be a step down in the pace of job growth from the Q4 average of 284k workers per month but still consistent with a US labor market that is growing near trend. We forecast that private payrolls increased by 180k, implying that the government sector added only 5k workers in January. We believe some of the public sector job gains in late 2015 were due to stronger demand for postal service workers during the holiday season and should return to a more modest pace of hiring. Although the unemployment rate leveled off at 5.0% the last three months, on an unrounded basis, it continued to trend lower. We believe that the unemployment rate will inch down enough to push the official unemployment rate to 4.9%. Last, we expect average hourly earnings to rebound by 0.31% m-o-m (2.25% y-o-y) after declining slightly in December.
Deutsche Bank
After the robust 292k print we got in December, market expectations are currently for a 190k gain, while our US economists are slightly more cautious and are forecasting a 175k gain (along with no change to the unemployment rate at 5%). Post the soft employment components from ISM readings we got earlier this week, it seems like the whisper number is probably closer to 150k however. As is standard practice at this time of year we’ll also get the revisions for five years of payrolls data today. Last quarter’s employment cost index, which is broader than average hourly earnings, showed steady and modest year-over-year gains of 2.0%. The latter are expected to show a slightly higher annual growth rate (2.2%) in January.
ING
The latest ADP survey posted a respectable 205k gain on the previous month, which tallies quite well with the consensus expectation for a payrolls figure of about +200k. It could be that December was an aberration, not the beginning of a new trend, and that would certainly be in keeping with the run of other data since then. If so, then we might expect this month or next to provide some payback to take us back to whatever the true underlying trend of jobs growth is. If the trend is closer to 250k than 300k, then we might need to see payrolls come in close to the consensus 200k. But equally, trend payrolls was closer to 200k before the 4Q15 pick-up, and if this is where genuine labour demand lies, then it will require a figure closer to 150k to bring hiring back into line.
Danske Bank
The most important release today is the jobs report for January. The labour market tightened significantly in 2015, which was the main reason why the Fed raised the target rate in December. The financial turmoil partly reflects rising growth concerns due to tighter monetary policy in the US and weak economic data and hence a strong jobs report could calm the markets. We expect non-farm payrolls to have increased 200,000 in January in line with the recent trend. The unemployment rate is likely to be unchanged at 5.0%.
ANZ
In recent times employment growth has been robust. Non-farm payrolls gained 284k m/m in Q4, above the annual average of 221k m/m. The firmness of the labour market has been an important factor underpinning solid household spending and keeping sentiment buoyant despite the turmoil in financial markets. Non-farm payrolls are expected to rise by 194k in January, and the unemployment rate is forecast to remain unchanged at 5.0%.
Lloyds Bank
Today’s official US non-farm payrolls are expected to be around 180-190k, down from 292k in December, while the unemployment rate is forecast to remain unchanged at 5.0%. Annual average hourly earnings growth is expected to ease to 2.2% from 2.5%.
BNP
Today we expect payroll growth to have slowed to 175k in official jobs report.
MUFG
We would view non-farm employment growth of between 150k to 200k in January as a reasonable outcome providing reassurance that the underlying trend for employment growth remains solid. Our own regression model which admittedly underestimated employment growth in Q4 is projecting employment growth of 185k. It would likely provide some modest support for the US dollar as our short-term models are signalling that weakness appears to have overshot somewhat in recent days. Readings materially below 150k or above 200k would trigger a larger US dollar response with risks skewed to the downside. Revisions to the employment data will add to the uncertainty as well.
TDS
TD expects the pace of employment growth to slow to 177K, down from the brisk 292K pace in December, which would mark the slowest pace of job growth since September 2015. TD expects the unemployment rate to remain unchanged at 5.0. In the coming months, we expect the positive momentum in the labor market to be sustained, though the pace of growth should remain in the 175K to 200K range.
BBH
Given the recent averages, it is unreasonable to expect that job growth exceeded December's 292k. The consensus is around 190k though we suspect the risk is on the downside. Provided the surprise is not significant, attention can focus on the details. There is a chance the unemployment rate cut tick down to 4.9%, a new cyclical low.
Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls: Expect another round of dollar sell-off”
We also have live coverage of the NFP release lined up for our readers. Kindly Click Here to “Trade Nonfarm Payrolls with FXStreet - Live Coverage".
Goldman Sachs
We expect a 170k gain in nonfarm payroll employment in January, below consensus expectations of 190k—and a downward revision from our forecast at the start of the week. Labor market indicators were weaker in January, with declines in the employment components of both the ISM manufacturing and nonmanufacturing surveys and rising jobless claims. We also expect some payback from the unusually warm weather and residual seasonality in couriers and messengers’ employment, which boosted payrolls in 2015Q4. The unemployment rate is likely to remain unchanged at 5.0%. Average hourly earnings are likely to rise at 0.4% month-over-month due mostly to calendar effects and a likely small boost from state-level minimum wage hikes.
SocGen
Our analysis suggests that hiring remained robust, underutilization of labor resources diminished and wage gains quickened during the reference period. We expect government statisticians to report that nonfarm payrolls expanded by 245,000 in January – a touch below the autumn quarter’s breakneck 284,000-job pace. Joblessness probably narrowed as well at the beginning of the New Year, leaving the civilian unemployment rate at the 4.9% level that monetary policymakers’ generally associate with full employment. Oft-discussed calendar quirks associated with the termination date of the establishment survey, combined with scheduled increases in state minimum wage rates, suggest that average hourly earnings jumped by 0.4% in January – the largest gain since last August. The mean work span of all private workers is forecast to clock in at 34.5 hours for a third straight month.
RBS
The three-month moving average of US non-farm payroll growth surged to +284K in December, its highest since January 2015. But while we expect labor market gains to continue at a solid pace, that trend may prove unsustainable into January. Our trading desk economists forecast non-farm payroll growth of 180K in January, slightly below the listed consensus and well below December’s 292K surge. Less supportive base effects in January may mean that the average hourly earnings growth rate in January dips from 2.5% y/y to 2.2% y/y, even though our economists look for a relatively firm +0.3% m/m advance in earnings. The unemployment rate may dip below 5.0% for the first time since 2007 (RBSe 4.9%).
Nomura
Our forecast, if realized, would be a step down in the pace of job growth from the Q4 average of 284k workers per month but still consistent with a US labor market that is growing near trend. We forecast that private payrolls increased by 180k, implying that the government sector added only 5k workers in January. We believe some of the public sector job gains in late 2015 were due to stronger demand for postal service workers during the holiday season and should return to a more modest pace of hiring. Although the unemployment rate leveled off at 5.0% the last three months, on an unrounded basis, it continued to trend lower. We believe that the unemployment rate will inch down enough to push the official unemployment rate to 4.9%. Last, we expect average hourly earnings to rebound by 0.31% m-o-m (2.25% y-o-y) after declining slightly in December.
Deutsche Bank
After the robust 292k print we got in December, market expectations are currently for a 190k gain, while our US economists are slightly more cautious and are forecasting a 175k gain (along with no change to the unemployment rate at 5%). Post the soft employment components from ISM readings we got earlier this week, it seems like the whisper number is probably closer to 150k however. As is standard practice at this time of year we’ll also get the revisions for five years of payrolls data today. Last quarter’s employment cost index, which is broader than average hourly earnings, showed steady and modest year-over-year gains of 2.0%. The latter are expected to show a slightly higher annual growth rate (2.2%) in January.
ING
The latest ADP survey posted a respectable 205k gain on the previous month, which tallies quite well with the consensus expectation for a payrolls figure of about +200k. It could be that December was an aberration, not the beginning of a new trend, and that would certainly be in keeping with the run of other data since then. If so, then we might expect this month or next to provide some payback to take us back to whatever the true underlying trend of jobs growth is. If the trend is closer to 250k than 300k, then we might need to see payrolls come in close to the consensus 200k. But equally, trend payrolls was closer to 200k before the 4Q15 pick-up, and if this is where genuine labour demand lies, then it will require a figure closer to 150k to bring hiring back into line.
Danske Bank
The most important release today is the jobs report for January. The labour market tightened significantly in 2015, which was the main reason why the Fed raised the target rate in December. The financial turmoil partly reflects rising growth concerns due to tighter monetary policy in the US and weak economic data and hence a strong jobs report could calm the markets. We expect non-farm payrolls to have increased 200,000 in January in line with the recent trend. The unemployment rate is likely to be unchanged at 5.0%.
ANZ
In recent times employment growth has been robust. Non-farm payrolls gained 284k m/m in Q4, above the annual average of 221k m/m. The firmness of the labour market has been an important factor underpinning solid household spending and keeping sentiment buoyant despite the turmoil in financial markets. Non-farm payrolls are expected to rise by 194k in January, and the unemployment rate is forecast to remain unchanged at 5.0%.
Lloyds Bank
Today’s official US non-farm payrolls are expected to be around 180-190k, down from 292k in December, while the unemployment rate is forecast to remain unchanged at 5.0%. Annual average hourly earnings growth is expected to ease to 2.2% from 2.5%.
BNP
Today we expect payroll growth to have slowed to 175k in official jobs report.
MUFG
We would view non-farm employment growth of between 150k to 200k in January as a reasonable outcome providing reassurance that the underlying trend for employment growth remains solid. Our own regression model which admittedly underestimated employment growth in Q4 is projecting employment growth of 185k. It would likely provide some modest support for the US dollar as our short-term models are signalling that weakness appears to have overshot somewhat in recent days. Readings materially below 150k or above 200k would trigger a larger US dollar response with risks skewed to the downside. Revisions to the employment data will add to the uncertainty as well.
TDS
TD expects the pace of employment growth to slow to 177K, down from the brisk 292K pace in December, which would mark the slowest pace of job growth since September 2015. TD expects the unemployment rate to remain unchanged at 5.0. In the coming months, we expect the positive momentum in the labor market to be sustained, though the pace of growth should remain in the 175K to 200K range.
BBH
Given the recent averages, it is unreasonable to expect that job growth exceeded December's 292k. The consensus is around 190k though we suspect the risk is on the downside. Provided the surprise is not significant, attention can focus on the details. There is a chance the unemployment rate cut tick down to 4.9%, a new cyclical low.
Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls: Expect another round of dollar sell-off”
We also have live coverage of the NFP release lined up for our readers. Kindly Click Here to “Trade Nonfarm Payrolls with FXStreet - Live Coverage".