US NFP to print below consensus 160k figure for April - Rabobank

Philip Marey, Senior US Strategist at Rabobank, suggests that according to their own econometric model – which takes into account other labor market data that have already been published has generated a 160K forecast, which is well below consensus.

Key Quotes

 “Earlier this week, the FOMC dismissed the weakness in recent data as ‘transitory’. They even claimed that job gains were solid, on average, in recent months. Of course, averaging out a 98K March figure with 200K+ figures in January and February does the trick. However, it also ignores a possible signal that momentum is fading. Last month, many analysts were too quick to dismiss the weak nonfarm payroll growth in March as a reflection of bad weather. However, other BLS data revealed that there was only a minor increase in the number of people with a job not showing up for work due to bad weather between February and March.”

“What’s more, the payroll growth slowdown in March was also evident in the employment sub-index of the ISM Non-Manufacturing Survey. Earlier this week, the figure for April was even slightly weaker. And the employment subindex of the ISM Manufacturing Survey – which was still strong in March – also headed south in April.”

“In our view, it’s too early to dismiss recent data as noise, in fact there may be several signals that should not be overlooked. What may appear as transitory at first, could very well be a more sustained loss of momentum in the economy. There are only two more Employment Reports before the next FOMC meeting on June 13-14. The first will be published today at 14:30 CET.”

“The consensus expectation is a rebound in nonfarm payroll growth to 190K. However, our own econometric model – which takes into account other labor market data that have already been published – generates a 160K forecast, well below consensus.”