Summary of nonfarm payrolls expectations - Nomura

Analysts at Nomura offered a summary of their expectations for the June employment where they suggest numbers point to further tightening in labour markets. 

Key Quotes:

"June likely saw another strong month of jobs growth. We expect a 165k increase in nonfarm payroll employment, similar to the average pace of the past six months (161k) and above the sustainable pace. 

We expect average hourly earnings to increase by a healthy 0.34% m-o-m in June (2.69% y-o-y), which would be a sharp uptick from last month’s 2.46% y-oy reading. 

We expect the unemployment rate in June to remain unchanged from May’s at 4.3%. 

While the goods-producing sector (mining, manufacturing, and construction) accounts for only 14% of nonfarm payroll employment, it has contributed an outsized share of labor market strength in 2017. 

Goods-producing industries have contributed 191k in payroll growth since January, almost triple their entire contribution for the year of 2016 (64k). If goods-producing industries had stayed at their average monthly gain of 2016, overall payroll growth this year so far would have averaged 129k per month, instead of the actual 162k. 

Declines in the number unemployed workers with previous work experience in goods-producing industries have contributed outsized declines to the stock of unemployed."