US NFP Preview: 8 major banks expectations from the December release

As we are closing in on the December month’s release of US Non-Farm Payrolls data, here are the expectations as forecasted by the economists and researchers of 8 major banks.

The market consensus is for a 175k gain while all the 8 major banks expect that the December NFP is likely to print a number in between 150K to 220K and the unemployment rate is likely to rebound a little from 4.6% in November to 4.7%-4.8% in December.

MUFG

The key event today will of course be the non-farm payroll report for December. Although that might be a little lower following the ADP employment increase of just 153k yesterday. Our own internal NFP model gives us an estimate of 220k although our model does have a tendency to overshoot the actual NFP print by about 50k – if that holds it would suggest that the current market consensus is about right – which following the ADP would perhaps be taken positively by the market. After a weak November m/m reading (-0.1%) hourly wages are likely to have rebounded in December with the annual rate jumping from 2.5% to 2.8%.

SocGen

In December, we look for nonfarm payrolls to have increased by 185,000, essentially in line with the recent trend (three-month average of 176,000). Meanwhile, average hourly earnings slid by 0.1% in November, but calendar effects may have led to a 0.3% rebound in December, which would push the annual rate back to 2.8% from 2.5% (average hourly earnings in December 2015 were little changed). Elsewhere, the unemployment rate slid from 4.9% to 4.6% in November, but we expect that a rebound in the labor force in December led to a partial retracement, with the rate rising to 4.8%.  

Nomura

We forecast that nonfarm payrolls increased by 175k in December, following a steady gain of 178k in November. We expect that private payrolls gained 170k, implying that the public sector added 5k workers to its payrolls. In addition, we expect that unemployment rate increased slightly to 4.7% in December following a 0.3pp decline to 4.6% in November. As for wages, we expect average hourly earnings to have rebounded by 0.2% m-o-m (2.7% y-o-y) following a 0.1% decline in November.

Danske Bank

We estimate job growth was around 170,000 in line with the recent trend. The unemployment rate fell to 4.6% in November, the lowest level post-crisis. However, as this was due partly to a declining labour force, we estimate the unemployment rate has risen back to at least 4.7% in December. Average hourly earnings declined surprisingly in November, due mainly to falling wages among supervisory workers. We estimate average hourly earnings increased 0.2% m/m in December, implying an increase in the annual wage growth rate to 2.6% y/y, from 2.5% y/y in November.

Deutsche Bank

While we expect headline nonfarm payrolls (150k forecast vs. 178k previously) to moderate following a strong gain in government employment in November, private payrolls (150k vs. 156k) should remain roughly steady. We will also be focused on average hourly earnings (+0.2% vs. -0.1%), which declined last month for the first time since December 2015. If our earnings projection is on the mark, the year-over-year growth rate would improve a couple of tenths to 2.7%. This is important for monetary policymakers, who are looking for confirmation that the economy has reached full employment. Even if the unemployment rate were to rise a tenth to 4.7% as we anticipate, it would still be below the Fed's most recent estimate of the longer-run rate (4.8%).

BBH

The highlight of the week is the US jobs report.  The consensus is for about the same as November or 178k.  We see scope for disappointment.  Over the last ten years, December has seen less job growth than November in seven times and for the last three years in a row.  Many economists anticipate that the unemployment rate will tick up to 4.7% from 4.6%.  However, barring a major surprise, the most important aspect of the report may be the average hourly earnings.  It was a disappointing when it fell by 0.1% in November.  The year-over-year pace may recover to the recent high seen in October of 2.8%.

TDS

December payrolls should reveal robust job growth with TD calling for an above-consensus 185k (mkt: 175k) while the unemployment rate should push higher to 4.7% on a rebound in participation (in line with consensus). Hourly earnings should come in strong at 0.3% m/m, which is in line with the market though we see upside risks.

RBC CM

RBC forecasts payroll growth to remain near trend in December, with a 160K gain expected (cons: 175k). Jobless claims continue to plumb the depths and job openings remain near cycle highs (especially on a relative-to-hirings basis). Going forward, the fact that small business hiring plans shot up to a record high post-election bodes well for the employment complex overall.

Click here to read more about the NFP preview from our Chief Analyst Valeria Bednarik titled “Nonfarm Payrolls Preview: could surprise to the upside, but still not be enough to save the greenback”