August Payrolls Likely To Disappoint, Schools Blamed

in Economy by

Everyone’s now weighed in on what to expect from tomorrow’s all important August NFP print and on balance, they’re taking a cautious approach (with the possible exception of BNP who’s looking for a blockbuster print).

As we showed on Wednesday, Barclays is cautious but thinks any weakness is exaggerated by the ubiquitous “seasonal” factors, while Citi is extremely apprehensive based on an analysis of the history of initial August payroll prints (and remember, it’s the initial print that matters). For their part, Deutsche echoes these concerns and sees 150K versus consensus of ~180K.

But hell, what do they know? What we really need to find out is what Goldman thinks because after all…” Government Sachs.” Here’s the Squid’s forecast:

“We expect a 165k increase in nonfarm payroll employment in August, below consensus expectations for a 180k gain.”

“Our below-consensus forecast primarily reflects seasonal quirks specific to the August payroll period. Since 2011, August payroll growth has fallen short of Bloomberg consensus expectations by an average of 49k, only to be revised up by an average of 71k in subsequent releases. Industry-level payroll data indicate that the education sector (specifically, education services and state & local government employment, the latter largely reflecting public schools) accounts for much of the upward revision, which mostly occurs from the first to the second estimate of payroll growth (Exhibit 1). In our view, the initial August weakness and subsequent revisions reflects seasonal adjustment challenges related to shifts in the timing of school calendars.”


(Charts: Goldman)

That’s right. Blame school. Damn them and their “calendars.”

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