US NFP Preview: Eight major banks expectations for June jobs report

Today, the US jobs report for June is due to be released at 12:30 GMT and as we get closer to that time, here are the expectations forecast by the economists and researchers of eight major banks regarding the upcoming employment data. Most of the market specialists are expecting US NFP to post-reading in between +2 million and +8 million in June, while the consensus is +3 million reading. In addition, the unemployment rate is expected to fall to 12.3% from 13.3%.

TDS

“Payrolls probably rose strongly again in June: We estimate up 4.0 million, following a 2.5 million gain in May. Despite the expected strength in payrolls, we expect the unemployment rate to remain around where it was in May at 13.3%.” 

ING

“We look for payrolls to rise by around 3.5 million, but we have to remember that millions more remain out of work, with Google Mobility data suggesting in many states, especially in populous ones like New York, New Jersey and California, consumer and business activity remains far from normal. The unemployment rate should move slightly lower, but we caution that this is not a reliable indicator and understates the true rate of joblessness. To be recorded as unemployed by the Bureau for Labour Statistics you have to be actively job hunting, however, given the dislocating effects of the Covid-19 containment measures you do not have to be actively looking to claim benefits. As such, the ‘true’ unemployment rate is likely still around 20%. Average hourly earnings will fall sharply, but this is a statistical effect caused by lots of relatively low earning workers regaining employment, dragging the ‘average’ level of hourly wages lower. It is meaningless.”

CIBC

“There’s been more noise, less signal in the jobless benefit data as a tool for predicting payrolls changes, but we lean towards a 5 million rebound in June, and a drop in the jobless rate to 10.7%. From here on, however, progress will be slower, not only due to climbing Covid-19 caseloads, but also the reality that many of the remaining lost jobs are in sectors not likely to join the parade. Average wages will drop given heavier rehiring at the low end of the scale. Similar to employment, the bounce we expect in the ISM won’t be as readily followed up with commensurate gains.” 

Westpac

“The May employment report shocked the market, with 2.5 millionn jobs created in the month against an expectation of a large fall. Emphasised by this result is the rapid re-opening of US state economies as well as the use of Government support measures to keep staff on the books – albeit at reduced hours. Another large gain of 2 million is anticipated in June given we have seen a further move towards 'normal' trading in the past month. The unemployment rate is not only determined by jobs but also participation. As state economies re-open, participation is likely to rebound, holding up the unemployment rate at 12.5%. Underemployment will also remain historically high.” 

RBC

“We are penciling in an 8 million increase in payroll employment and the unemployment rate to be posted at 13%.”

NBF

“Employment gains should have been sizeable in the month judging from a decline in continuing claims between the May and the June reference periods. Unfortunately, these gains are likely to have been at least partially offset by yet more job losses; initial jobless claims continued to pile at a steady clip over that period. Taking these conflicting trends into account, we are calling for a 2.5 million increase in payrolls. The household survey is expected to show a similarly-sized progression in employment which would be consistent with a decrease in the unemployment rate to 12.6%, assuming yet another rise in the participation rate.” 

Deutsche Bank

“Our US economists are looking for a gain in nonfarm payrolls of another +2.5 million, following last month’s +2.509 million reading, along with a reduction in the unemployment rate to 12.5%. However, given the persistent misclassification issues, the U-6 rate (19.4% vs. 20.2%) will provide a more accurate picture with respect to the underlying state of the labour market. In addition, it’s worth remembering that given the US shed over 22 million jobs in March and April, even another 2.5 million boost would still mean that less than a quarter of the total jobs have been recovered, so there’s still a long way to go before the labour market gets back to something approaching normality. Also bear in mind that this data is backward-looking, so any positive developments won’t necessarily be sustained if a further worsening of the pandemic leads more states to roll back reopening measures.”

Danske Bank

“We expect an increase in employment of 4 million but the ADP jobs report released yesterday showed an increase of 2.4 million (one has to keep in mind that the ADP jobs report has a poor track record, though). Consensus according to Bloomberg is 3 million. The jobs report is old news in the sense that the negative virus development in the US has led to more local lockdowns and may imply a setback in consumption and hence employment in July.”