What Economists Are Saying Ahead of the U.S. Jobs Report for May
The unemployment rate is projected to remain at a 49-year low of 3.6 percent.
(Bloomberg) -- Economists expect U.S. payroll gains cooled last month to a still-solid pace that’s down somewhat from the prior reading but still in line with consistent signs of a broadly robust job market.
Nonfarm employment increased by 175,000, according to Bloomberg’s survey, a level that would be down from April’s 263,000 but still well above what economists consider sufficient to accommodate labor-force growth. The unemployment rate is projected to remain at a 49-year low of 3.6% while annual wage gains hold for a third month at 3.2%, near the strongest pace of the economic expansion.
Estimates in Bloomberg’s payrolls survey range from 80,000 to 228,000, with some forecasters noting that temporary federal government hiring for the U.S. Census Bureau’s 2020 count may be poised to boost the tally. Other labor-market indicators have given mixed signals this week, with data Wednesday showing companies in the ADP Research Institute report added 27,000 workers in May, the fewest since 2010, while the Institute for Supply Management survey indicated a solid pace of hiring by services firms.
Here’s what some economists expect, with projections listed from low to high:
Pantheon Macroeconomics
- 100,000 jobs, 3.6% unemployment
- “Even in the worst case, with private payrolls close to zero, panic would be the wrong response, either in markets or at the Fed,” Chief Economist Ian Shepherdson wrote in a note, adding that the number hired for the census is a wild card. “Single month’s numbers rarely signal an unambiguous shift in the trend, and forward-looking surveys clearly point to a rebound in payroll gains by mid-summer, and perhaps before, especially if the May reading is very low.”
Bloomberg Economics
- 160,000 jobs, 3.6% unemployment, 3.2% annual wage growth
- “Any material deterioration in the payroll diffusion index, which measures the breadth of hiring in the labor market, could be an early warning that tariffs are hindering job creation,” wrote economists Carl Riccadonna and Yelena Shulyatyeva. “Rattled business confidence could cause a pullback in the pace of hiring in the factory sector and tangentially related industries.”
Wells Fargo
- 180,000 jobs, 3.7% unemployment, 3.2% annual wage growth
- “Hiring gains should remain broad-based in the private services sectors, though at a materially lower pace,” Senior Economist Sam Bullard wrote in a note. “A close eye will be kept on manufacturing and trade/transport for any signs to suggest the escalation of trade policy concerns is having a significant impact on hiring trends.”
NatWest Markets
- 185,000 jobs, 3.6% unemployment, 3.2% annual wage growth
- “Any major surprises in May payrolls seem tilted to the low side of our forecast, which wouldn’t be too surprising given the rising uncertainty in the outlook in the U.S. and the above-trend gain registered in April,” economists Michelle Girard and Kevin Cummins wrote in a report.
Morgan Stanley
- 189,000 jobs, 3.6% unemployment, 3.2% annual wage growth
- Chief U.S. economist Ellen Zentner and colleagues said they see “slight downside risks” for jobs though still left her forecast unchanged after the weak reading on ADP payrolls. Census hiring could provide a “tailwind.”
Goldman Sachs
- 195,000 jobs, 3.6% unemployment, 3.1% annual wage growth
- “Employment surveys remain at healthy levels and the payroll survey period largely preceded the recent trade war escalation,” economist Spencer Hill wrote. “We also place very little weight on the ADP report this month, because most of its deceleration reflected statistical noise as opposed to actual hiring weakness.”
UBS
- 208,000 jobs, 3.7% unemployment
- “We anticipate that the acceleration in the trade war, although announced in the survey week, will have no effect on this month’s numbers,” economist Robert Martin wrote. “Instead, we expect the strong underlying economic fundamentals to continue to support employment.”
To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net
To contact the editor responsible for this story: Scott Lanman at slanman@bloomberg.net
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