NFP Preview: Forecasts from 11 major banks, strength continues

The US Bureau of Labor Statistics (BLS) will release the May jobs report on Friday, June 3 at 12:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 11 major banks regarding the upcoming employment data. 

After an increase of 428K jobs in April, May's report is set to show a somewhat lower advance of 325K while a low unemployment rate of 3.6% is set to make way to an even lower level of 3.5%.

Commerzbank

“In May, we expect another noticeable increase in employment, even though the various negative factors suggest that the momentum is slowing. We forecast job growth of 300K, roughly lower than in April.”

Westpac

“US employment growth looks to be losing momentum but is currently still robust (370K), consistent with a further decline in the unemployment rate. Ahead, we believe employment growth will slow further, as tightening takes effect, and that participation will strengthen, making the unemployment rate of 3.5% expected from this month a likely low for the cycle. Given the tight state of the labour market, hourly earnings will continue to be bid higher, though not as aggressively as in 2021 and at less than the rate of inflation. As a result, real incomes are set to continue falling through 2022.”

TDS

“Employment likely continued to advance firmly in May (300K) but at a more moderate pace after consecutive job gains at 428K in March and April. Employment in the household survey likely rebounded after printing negative in April. We expect this to lead to a drop in the unemployment rate to a post-COVID low of 3.5%. We also look for wage growth to remain steady at 0.3% MoM (5.2% YoY).”

SocGen

“We expect 440K NFP reading in May. Expectations are for moderation but we still see strong hiring in retail franchises. This includes restaurants and hotel chains that are still struggling to find employees and return to normal operations. In April, the unemployment rate held steady at 3.6%, as expected. We look for a modest decline to 3.5% in May. Labor force participation should rise slightly from the lower April pace of 62.2 (which had been a drop from 62.4 in March). Overall, as the unemployment rate dips further below the long-term normal level (4.0% according to the Federal Reserve and 4.4% according to the Congressional Budget Office), each decline should be more challenging. Wages are moderating slightly, but we view the pace of above 4% as still too high and adding to inflation and profit margin concerns. Workers should enjoy a wage that is above inflation as long as labor productivity is positive.”

NBF

“Hiring should have continued at a strong pace in the month given the very high number of vacancies. Layoffs, meanwhile, could have stayed roughly stable judging from previously released data on initial jobless claims. All told, payrolls may have increased by 325K. The household survey is expected to show a similar gain, a development which could leave the unemployment rate unchanged at 3.6%, assuming a one-tick increase in the participation rate to 62.3%.”

CIBC

“Overall, headcounts likely increased by 300K, which would still be enough to push the unemployment rate down to 3.5%. With hiring likely tilted towards lower value-added services, wage growth likely slowed to 0.3% on the month. We’re below the consensus which could see the USD and bond yields fall.”

Danske Bank

“We expect another strong US jobs report with 400K new jobs in May.”

Deutsche Bank

“We project gains of 325K vs last month's 428K reading that came in above the median estimate of 380K on Bloomberg.”

ING

“US jobs report should be firm (320K). Once again the main constraint will be a lack of worker supply with nearly two vacancies for every unemployed American (we will get an update on vacancies in next Wednesday’s JOLTS report). This means wages will continue to be bid higher and the unemployment rate will likely fall to 3.5%.”

Wells Fargo

“We forecast NFP to rise 325K in May and look for the unemployment rate to decline to 3.5%. A 325K increase, should it occur, would mark a moderation from the job gains seen over the past couple of months. Regional Fed employment indices improved in May, but at a cooling pace. The job openings rate has also appeared to top out and small business hiring plans have softened. With job openings more smoothly translating into new hires, stiff competition for workers will presumably improve and help quell wage pressures. We forecast average hourly earnings to rise 0.4% MoM in May.”

Citibank

“We continue to expect that monthly job gains are likely to slow over the coming months as labor supply shortages limit the pace of hiring, with 315K payrolls added in May and some further slowing back towards a pre-pandemic pace of ~150K-250K over the coming months.”