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Today's Economic Data Highlights: Goldman Anticipates Zero Private Payrolls, -125K Total

Submitted by Tyler Durden on 09/03/2010 07:38 -0400

Goldman Sachs recaps expectations for today's key event - payroll day… also the ISM nonmanufacturing index and a couple of Fed speeches.

8:30: Employment report for Aug…another modest gain in private-sector hiring? Labor market indicators for July have been mixed, as discussed in last night’s daily comment. Initial claims rose into the payroll survey week, perhaps with some help from distortions, and have since fallen back into the upper end of the previous range. Consumer perceptions of job availability have worsened. On-line job indexes have pulled back. However, the employment index of the ISM’s manufacturing index rose further from an already high level. On balance, we read these data as consistent with no change in private-sector payrolls. The runoff of Census jobs and a modest reduction in government payrolls should then result in a drop in total payrolls similar to what we saw for July. https://portal.gs.com/gs/portal/home/fdh/?st=1&d=9614468.
On total payrolls, GS: -125k, median forecast (of 81): -105k, ranging from -190k to +75k; last -131k.
On private-sector payrolls, GS: flat, median forecast (of 55): +40k, ranging from -12k to +120k; last +71k.

We and others look for an up-tick in the unemployment rate in the wake of the loss of Census jobs. The sharp increase in the number of total beneficiaries following the renewal of the emergency program supports this view, though this figure did pull back in the week ending August 14. It’s noteworthy that not one of the 79 forecasters in the Bloomberg survey is anticipating a decline in the unemployment rate, in contrast to last month (when the Census effect was roughly similar to what we anticipate this time). This probably reflects the downgrade of forecasts that has occurred since then, which in turn is relevant in understanding recent upside surprises in the data – the surprises have occurred against diminished expectations.
GS 9.6%; median forecast (of 79): 9.6%, ranging from 9.5% to 9.8%; last 9.5%.

We continue to look for deceleration in wage inflation on a trend basis as the unemployment rate hovers just under 10% and the broadest measure of underemployment remains in the mid teens.
GS +0.1%; median forecast (of 56): +0.1%, ranging from +0.1% to +0.2%; last: +0.2%.

9:45: Chicago Fed President Charles Evans opens a symposium on OTC derivatives….at the Chicago Fed. Mr. Evans’ next turn as a voting member of the FOMC comes in 2011.

10:00: ISM nonmfg index for Aug…another upside surprise? We and others expect a slight moderation in this measure of economic momentum outside the manufacturing sector. Will we and others be surprised by an increase like we were with the manufacturing index? It’s obviously possible, but far from a foregone conclusion. Monthly changes have only a 0.24 correlation over the past 10 years and only 0.09 in the last five.
GS: 53; median forecast (of 67): 53.2, ranging from 51 to 55.5; last 54.3.

10:00: Atlanta Fed President Dennis Lockhart speaks on the economy….at East Tennessee State University, Johnson City, TN. Mr. Lockhart’s next turn as a voting member of the FOMC comes in 2012.

Ed McKelvey

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Fri, 09/03/2010 - 07:45 | 561435 Turd Ferguson

The way the market has been ramped this week, on almost zero volume, reminds me of the days before the announcement of QE1.9...prepare the way, get the market a higher starting point for the bad news.

Therefore, I expect a piss-poor number. -50,000 payrolls and 9.8%.

Fri, 09/03/2010 - 08:46 | 561518 Turd Ferguson

Shows ya what I know...

Fri, 09/03/2010 - 07:48 | 561438 Ivanovich

That's because the market believes the Fed WILL do QE2.0 come Sept. 24th. it's all started with the Squid's report that the Fed would have to do QE2.0 sooner rather than later.

Fri, 09/03/2010 - 07:50 | 561439 Chemba

weak payroll, markets down at open, "strong" ISM, markets up at 10a

by the way, how do markets function properly when Banana Ben is out of the office, e.g. like when he is lying to the FCIC about the causes of the housing bubble and financial crisis?

Fri, 09/03/2010 - 08:04 | 561450 Samsonov

Chemba, perhaps most don't know why Speed Racer started racing: it was to win venture capital so Pops could manufacture his new engine, which the corporate suits rejected. It is a pure story of capitalism and innovation, and the struggles of a small company startup. Speed was the last cartoon hero who represented self reliance, hard work, and ambition. Good selection.

Fri, 09/03/2010 - 07:59 | 561442 old_turk

With the ISM 'number' and the ECRI less negative, the suggestion would be a 'beat'.

Maybe -100k ... -95k range unless GS squid have gotten that bug fixed in BLS conference room then, -125k is the number.

This whole week just smells of driving short interest down and out of the market which isn't a good thing.

Fri, 09/03/2010 - 07:57 | 561443 Pillage

GS: Nothing incredibly bullish about jobs report expected and looking for moderation in non mfg ISM with the caveat "Will we and others be surprised by an increase like we were with the manufacturing index? It’s obviously possible, but far from a foregone conclusion".

Fri, 09/03/2010 - 08:11 | 561461 99er

Chart: Copper Futures

The apex of a rising wedge has been reached; equities may very well fall sharply today. So much for the Hamptons this Labor Day Weekend.

http://www.screencast.com/t/YzU4Zjc4Nzct

Fri, 09/03/2010 - 08:13 | 561464 LoneStarHog

John Williams at Shadow Government Statistics

I look for an outright payroll contraction in August, net of census impact, with the total jobs loss at good risk of exceeding the 135,000 to 150,000 range.

Unemployment rate consensus estimates for the August headline U.3 rate seem to be holding at 9.6%, up from 9.5% in July. The jump in unemployment should be more severe, particularly when short-term (U.6) and long-term (SGS) discouraged workers are counted.

Fri, 09/03/2010 - 08:19 | 561468 johngaltfla