I had a couple of downside surprise posts earlier:
- US jobs report due Friday - Goldman Sachs preview the Nonfarm Payroll for January
- Another warning about downside risk to Friday's NFP report
Via National Australia Bank locally here in Australia:
- Headlines will of course focus on Payrolls with risks to the downside of the market consensus of +150k after the fall in ADP payrolls of -310k; high frequency indicators such as HomeBase are also pointing to a hefty fall of around -260k with Omicron the driver.
- For the market though the attention will be on the unemployment rate and average hourly earnings. Unemployment is expected to be unchanged at 3.9% and thus remain below the Fed’s longer-term dot for unemployment of 4.0%. Average Hourly Earnings is expected to be 5.2% y/y, though the risk here is to the upside if the potential fall in headline payrolls is driven by lower paid hospitality workers as ADP suggests (ADP had -154k for hospitality).
- A consensus print for both unemployment and earnings will still likely see the Fed pencilling in four hikes in 2022. A favourable surprise on either would see many in the Fed wondering if they need to act even more aggressively.
