The US nonfarm payrolls data will be released today, on June 3rd, 2016 by the Bureau of Labor Statistics at 12:30 GMT. Heading into the event, the consensus estimates for the month of May are as follows:
- Monthly Nonfarm payrolls: 160k – 164k
- Unemployment Rate: 4.90%
- Average hourly earnings m/m: 0.20%
Previous (April NFP Report)
- Monthly Nonfarm payrolls: 160k vs. 200k
- Unemployment Rate: 5.0% vs. 5.0%
- Average hourly earnings m/m: 0.30% vs. 0.30%
- Average hourly earnings y/y: 2.50% vs. 2.40%
In April, US unemployment rate remained steady at 5.0% after rising from 4.90% in January 2016. The labor force participation rate fell to 62.80% beating estimates of 63.0% and was slightly below 63.0% print from March. The labor force participation rate the lowest since February 2016. Read the April 2016 NFP preview here.
The forecasts for May are dovish largely due to the Verizon strike. On Friday, a report from the Labor Department showed that the strike called by Verizon workers could likely shrink the May jobs report by as much as 35k jobs. The department’s report showed that the striking workers who did not receive a paycheck during the period would be considered as “unemployed.” The strike started on April 13 and is one of the largest strikes in the US in recent years. However, the setback is likely to be temporary as the BLS report added that a tentative deal was reached between Verizon and the striking workers.
May 2016 Payrolls Estimates
CIBC: Analysts at CIB expect to see +155k jobs in May, noting that “as striking telco workers dragged the number well below its 3-month average of 200k. Nevertheless, the strike should be temporary and doesn’t alter the ongoing strength in the labor market”. CIBC expects the US unemployment rate to fall to 4.90% with the average hourly earnings expected to rise 0.30% on a month over month basis, same as in April.
Barclays: Barclays expects to see May jobs to rise the only +150k. Analysts at Barclays note “[the] net effect of the strike on overall nonfarm payroll growth may be smaller than 35k. When Verizon workers went on a strike in August 2011, much of the 46k monthly contraction in telecommunications payrolls was offset by a 39k rise in temporary help services employment as the company sought replacement labor to keep its operations running. Recent news reports indicate that Verizon has hired thousands of temp workers.”
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Morgan Stanley: MS expects to see the May nonfarm payrolls rise +140k noting that the “underlying jobs decelerated and Verizon strike will cut -35k.”
BNP Paribas: Taking a negative stand on the May jobs report, BNP Paribas says “[We] expect payrolls to disappoint in May at just +110k. Services sector employment looks ripe for a slowdown, even abstracting from the effects of a strike that likely knocked 30 – 40k off information sector payrolls.” They further add, “[We] think that May payrolls could be weak and if we’re right, this would likely spark concern about the domestic outlook and foil the Fed’s hopes for a mid-year hike.”
Nordea: Analysts at Nordea expect to see a weaker NFP print, but stronger sub-component data. “Our forecast of a 125k gain in nonfarm payrolls is well below the 160k consensus estimate, which might fail to take the impact of the strike by about 40k Verizon workers fully into account.” Nordea expects the US unemployment rate to edge lower to 4.90%, matching consensus estimates while the average hourly earnings are expected to rise 0.30% on a month over month basis and expects the AHE to rise 2.50% on a year over year basis.
BofA Merrill Lynch: BofA expects to see the monthly jobs rise +160k, citing the Verizon strike and expects private payrolls would contribute 150k jobs while the government sector would contribute +10k. BofA says that there is a “potential reason for optimism in the jobs data as there is a tendency for April job growth to be revised higher.” BofA expects the US unemployment rate to remain unchanged at 5.0% while the average hourly earnings are expected to rise 0.20% on a month over month basis, with the year over year growth unchanged at 2.50%
