Today's Economic Data Docket - NFP Crunch Time
Some may recall that it was the abysmal August 2010 NFP number that set off the QE 2 chain of events (courtesy of Goldman Sachs, which promptly downgraded the economy, only to upgrade it 4 months later in the worst call to ever come out of its economic department). We may be 45 minutes away from another August... On the other hand, a solid beat in NFP means QE 3 is off the table for a long time, which will really spook stocks.
An advance look at today's events:
A critical jobs report follows a series of weak economic releases:
8:30: Employment Report (May): Slower growth. On Wednesday Goldman lowered its forecast for May nonfarm payroll employment growth to +100,000 from +150,000 previously due to the weaker-than-expected ADP and ISM reports. Consensus forecasts have also moved lower: the Bloomberg median estimate now stands at +165,000, down from +190,000 last Friday. The median estimate for the forecasts updated over the last two days is +130,000. GS continues to expect an 8.9% for the unemployment rate, in line with the consensus.
The composition of employment gains could help determine whether the weakness in recent data was caused by idiosyncratic factors or a broad-based slowing. Weakness concentrated in manufacturing employment would be relatively benign, as it could suggest supply-chain problems resulting from the events in Japan have temporarily stalled activity. If the downshift is instead concentrated in business services and retail employment, it could signal that other factors are weighing on growth.
Also worth watching is the household measure of employment (which weakened last month), hours worked (which could be affected by auto production cuts), and the employment-to-population ratio (because changes in the participation rate may influence the unemployment rate).
On total payrolls, GS: +100k; median forecast (of 89): +165k, ranging from +65k to +250k; last +244k.
On unemployment, GS 8.9%; median forecast (of 85): 8.9%, ranging from 8.7% to 9.1%; last 9.0%.
On earnings, GS +0.2%; median forecast (of 57): +0.2%, ranging from +0.0% to +0.3%; last: 0.1%.
10:00: ISM non-manufacturing index (May): Modest rebound. GS looks for the non-manufacturing ISM index to rebound slightly after an unusually large decline in April. Research suggests that last month’s drop was caused in part by biased seasonal adjustment. For the current month, this bias should fade. However, a larger rebound in the index appears unlikely. Instead, we believe distorted seasonal adjustment artificially raised the index during Q1.
GS: 54.0; median forecast (of 74): 54.0; last 52.8.
12:30: Federal Reserve Governor Daniel Tarullo speaks on regulatory issues.
15:30: Boston Fed President Eric Rosengren at Stanford University. Topic TBD.
From GS and ZH