StanChart See +50k Payrolls Post ADP

Standard Chartered forecast payrolls growth of just 50k and see average hourly earnings above or below 0.5% M/M as guiding market reaction. There is a chance the unemployment rate edges up after six months of steady drops.

• Standard Chartered forecast payrolls at 50k, noting that consensus of 150k is likely to shift down after the weak ADP of -301k (although they first had their figure of 50k prior to ADP).
• They question whether even a big miss in the payrolls figure will have much market reaction, with potential issues from the impact of Omicron-related absenteeism. “The NFP survey counts people as working who are paid for one hour of work, sick leave or vacation in the pay period” so on the flip side Omicron could also not have been captured if it generated short absences.
• However, AHE could move markets. “A big employment drop is likely to be concentrated among low-paid workers, so AHE growth of 0.5% or less and weak employment could indicate wage moderation”, whilst north of 0.5% would signal labor market tightness and a red flag to the Fed.
• The u/e rate is seen stable at 3.9% with a risk of edging up. They don’t see a reason for household employment outperforming payrolls again now that it has caught up after previously lagging.