US NFP Preview: 13 major banks expectations from the August release

We are closing in on the August’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 two months of bumper non-farm payrolls (NFP) figures, all the 13 major banks suggests that August tends to see downside surprises to expectations and expects NFP is likely to print a number in between 150K to 190K while the unemployment rate is expected to tick down to 4.8% from its last print of 4.9%.

Nomura

Our private payrolls tracking model is currently forecasting a gain of 201k jobs in August.  The latest reading of national business employment indicators suggests steady employment activity, and claims data remain at historically low levels. Taking these inputs into account, we forecast that private payrolls grew by 190k in August. We think that another solid month of job gains should absorb enough slack in the labor market to push the unemployment rate down 0.1pp to 4.8% from 4.9%, previously. Elsewhere, we forecast that average hourly earnings grew by 0.2% m-o-m (2.5% y-o-y) in August.

ING

After two months of bumper non-farm payrolls (NFP) figures, we look for a sub-consensus drop back to 150,000. This may come as a disappointment and prompt markets to push out rate hike expectations, but does a lower NFP number matter for the FOMC anymore? Recent FOMC speakers suggest not.

RBS

Following hefty increases in each of the prior two months, they look for job growth to have settled back a bit in August, with overall payrolls expected to have advanced by 175k in July. The details (average hourly earnings and average workweek) are also expected to be soft. As normal, the jerk reaction will be on the headline jobs growth print. However, the lasting impact may depend on details, most obviously average earnings.

MUFG

The underlying trend for employment growth has slowed modestly this year but remains solid averaging 186k jobs created per month to the end of July compared to 228k jobs created in the same period of last year. Our own NFP regression model is projecting job gains of 189k in August supporting our updated call for an imminent rate hike.

Deutsche Bank

Today’s big payrolls report has the potential in theory to reprice Fed September rate hike expectations nearer to or even above 50% (34% currently but down from 42% last Friday), especially if we print notably above 200k. Although trying to predict a fairly random number is a mugs game I would take the low side of the 180k consensus today (DB at 160k). A lot of people were a bit nervous about the seasonal distortion in last month's strong report and, over the last 5 years the initially-reported August nonfarm payroll gains has consistently disappointed consensus and by an average of 52k.

Rabobank

The headline expectation is a decent 180K, down from a blistering 255K in July. However, a word of warning. As Bloomberg has recently noted, August tends to see downside surprises to expectations in this key series. Hence we might end up with another ‘oops!’ moment, just as we did back in early June with the May jobs data, which subsequently pushed the Fed off the hiking trail (if they were ever really on it) in the summer.

Westpac

After averaging +274k the last 2 months, Aug payrolls will surely ease back to more “casual” pace nearer the 12mth average of 204k. That would be well above market expectations of 180k, and could put upward pressure on the USD.  Come Aug, a more modest pace of growth is anticipated for nonfarm payrolls, circa 170k. This will still leave annual employment growth well ahead of population growth and, absent a change in participation, see the unemployment rate edge lower to 4.8%. The risk on this front is that participation will rise, with the unemployment rate then unchanged.

Danske Bank

We expect job growth of 175,000 in August. This is below the prints of the past two months but still above the amount needed for labour market slack to come down. Additionally, we estimate average hourly earnings increased 0.2% m/m in August in line with the recent trend, implying an annual growth rate of 2.5%. We estimate the unemployment rate declined to 4.8% in August, but it is a close call between 4.9% and 4.8%.

RBS

The August employment data, while healthy, may fall short of that criteria on both fronts. First, following hefty increases in each of the prior two months, we look for job growth to have settled back a bit in August, with overall payrolls forecast to have advanced by 175,000 (private payrolls may have risen by 165,000).

ANZ

The consensus is for a rise in non-farm payrolls of 180k following July’s 255k. The unemployment rate is expected to edge down slightly to 4.8%, as is average hourly earnings growth to 2.5% y/y (from 2.6% in July).

TDS

The anticipation for August nonfarm payrolls will come to an end today at 8:30. TD expects payrolls to come in below the healthy 180k consensus due to a historical seasonal quirk for August that has caused payrolls to fall short of the consensus forecast in 14 of the last 19 years. We look for payrolls to grow at a relatively soft 153k pace while the unemployment rate should edge lower to 4.8%. Average hourly earnings should also disappoint, with TD calling for a flat print due to unfavourable calendar effects while the market looks for a 0.2% m/m gain. 

BBH

As it turns out, for the last five years, the August job growth has been reported below expectations. The average miss is 49k, with a range of 11k-88k. The median is 44k.    Newswire surveys are picking up a median guesstimate of 175k-180k. If we pretend that this is statistically significant, and subtract the average/median miss from today's expectation, the result of, say, around 130k, would likely be seen as a disappointment. The average this year is about 186k.  

RBC CM

Our economists’ forecast for headline payrolls is close to the consensus, which itself is unchanged after the ADP report earlier this week (RBC 175K; consensus 180K).

Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls Preview: Are you excited about it? We all are!”

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