CIBC Ahead Of Payrolls

Now exactly on consensus, CIBC see solid payrolls growth as pandemic hit sectors recover, the unemployment rate falling a tenth to 3.7% but modestly softer than expected wage growth.

• Employers likely added 490K to headcounts, with gains being concentrated in private services that were adversely impacted by the pandemic.
• The leisure and hospitality sector is still short 1.5mn employees relative to pre-pandemic levels, while the job openings rate remained elevated in that industry even during the Omicron wave.
• Higher wages were likely on offer in an attempt to overcome the ongoing labor shortage, but with hiring likely skewed towards lower paying positions within already lower value-added sectors, aggregate wages could have shown an only moderate 0.3% advance.
• They see the unemployment rate falling a tenth to 3.7% along with a modestly softer than consensus 0.3% M/M in average hourly earnings.
• Another strong month of hiring would add to the urgency for further Fed tightening, with a 50bps hike likely in store at the next FOMC. We’re close enough to the consensus forecast to imply little market impact.