NatWest: Below Consensus Payrolls

NatWest are again towards the very low end of consensus for payrolls growth and also see AHE a tenth softer than expected on a calendar quirk.

• Total nonfarm payrolls growth seen at +250k in May with the private sector adding 235k, with the softening suggested by the 20k net rise in jobless claims in the past month and the latest Homebase and NFIB data with the latter showing a scaling back in hiring intentions.
• AHE seen up +0.3% M/M, unchanged from April’s disappointing gain but this ‘softer’ print in May is in part due to a calendar quirk with the 15th of the month falling outside the reference week so increases in bi-monthly pay in the period were less likely to be captured in the survey.
• AHE are among the least reliable of wage data available since monthly changes might reflect changes in the employment mix rather than relative wages, although the next ECI isn’t due until Jul 29 (2 days after the Jul FOMC meeting).
• Other aspects of the employment report are expected to look solid, with the average workweek edging up to 34.7 hours, implying aggregative hours worked up +0.5% M/M after 0.3% in April and the u/e rate dipping a tenth to 3.5%.
• They were tempted to show even more of an improvement but higher participation likely capped the decline.