PREPPING FOR THE JOBS REPORT
Tomorrow brings the most important economic data of the month – the Nonfarm Payrolls Report. Investors appear to be prepping for a negative report after jobless claims came in weaker than expected this morning and are forecasting very marginal improvements in month over month job gains. Last month’s data came in at -216K jobs and an unemployment rate of 9.7%. The consensus is currently forecasting -170K and an unemployment rate of 9.8%. Let’s have a look around Wall Street at what analysts currently expect:
PNC is looking for -190K and an unemployment rate of 9.8%.
Wells Fargo says:
We expect nonfarm employment likely dropped by 205,000 jobs with the unemployment rate reaching 9.8 percent in August. Nonfarm employment will likely continue to decline into early 2010 and the unemployment rate will not likely top out until early to the middle of next year.
JP Morgan is the most optimistic of the bunch:
We forecast that the unemployment rate edged up to 9.8% in September from 9.7% (9.657%) in August. We ultimately expect the unemployment rate to peak at around 10.0% by the end of the year.
We expect that nonfarm payroll employment fell by 140,000 in September after falling by 216,000 in August and an average of 318,000 per month over the last three months. We also expect that the unemployment rate increased to 9.8% from 9.7%.
Zero Hedge has the report from Goldman Sachs:
Goldman’s NFP forecasts have an eerie ability to be +/- 3 people of the actual payroll number. Which is why those expecting an upside surprise to tomorrow’s payroll number may be unpleasantly surprised. Just released by Jan Hatzius of GS:
Downgrading Our Sept Payroll Forecast
BOTTOM LINE: We are changing our forecast for the September change in nonfarm payrolls to -250,000 from -200,000. We continue to think that the unemployment rate will be reported at 9.8%.KEY POINTS:
1. The latest data points on the US job market have been disappointing on balance, including the Monster index of on-line hiring, the ISM employment index, consumers’ assessments of job availability, and the total number of individuals receiving continuing claims for unemployment insurance, including those for extended benefits. Accordingly, we now expect nonfarm payrolls to be reported at -250,000 in tomorrow’s labor market report for September versus a previous forecast of – 200,000.
2. Although many of the same indicators would suggest a larger increase in the unemployment rate than the 0.1-point we have been expecting, the new information is not quite enough to warrant a change, especially since the 9.7% reported for August rounded up to that level. However, risks lie to the side of a higher figure.
Consensus is calling for marginal month over month improvement which doesn’t appear far off to us. Plus, the market is pricing in a fairly negative number. Nonetheless, ignore Goldman at your own peril. The risk aversion trade doesn’t change heading into tomorrow’s NFP data….
It would definitely be interesting if the markets go down big again tomorrow. Today the markets took out a lot of support technically speaking, and with bad fundamental news to cause it. I wouldn’t be too surprised if we see some buying, but if we go down a lot tomorrow it will definitely be interesting. I’ll probably buy some SPY call options since I believe soon we will get a buying frenzy to ride the ‘better than expected’ earnings wave coming up. I think 1000-1010 is the floor at the moment…
Lot of selling today to the oversold, technically speaking. The number isn’t good but isn’t too far from estimate. Market need volatility for the banks to make money. I don’t think we’d need an upside surprise on non farm numbers for market to go up. All we need is meet estimate. Today drop could take very bad non farm payrolls into consideration already.
Maybe you guys can help me with this question.
If most money going into bonds. Retail investors sit out. Why the big volume on the sell day? That wouldnt’ be selling the shares they borrow would it?
Goldman and the other banks are selling and taking profits. They’ve executed the ponzi scheme for another quarter and now will begin to unwind the trades they’ve had on.
Goldman’s NFP forecasts have an eerie ability to be +/- 3 people of the actual payroll number.
How can a forecaster be so accurate? BLS and Goldman could be using the same model. No wonder their per headcount bonus is $800,000 on top of salary. The market will prop tomorrow, better than expected. What do GS or these bankers really produce, anyone?