By Ian McKendry
WASHINGTON (MNI) – Markets are mentally prepared for another signal
that the economy is growing at a tepid pace when the Bureau of Labor
Statistics releases its’ non-farm payrolls report Friday, which may
present some risk for a better than expected report to move markets.
“I think the market is sort of braced for a negative number, so
from a reactionary standpoint I think you would get a bigger reaction to
a number modestly above where we are relative to a number that is minus
10,000 or something like that,” Tom Porcelli, Chief Economist at RBC
Capital markets told Market News International.
RBC is forecasting non-farm payrolls to be 30,000 with private
payrolls to be 55,000.
A Market News International survey of economist centered on a
median forecast of 70,000 for the headline non-farm payrolls number and
85,000 for private payrolls.
“I think you get a bigger reaction to say a plus 100,000 than you
would to a minus 10,000″ Porcelli added.
One of the key components to Augusts payroll report will be a
strike by Verizon communications employees which is expected to remove
roughly 40,000 workers from the non-farm payrolls number.
“I wouldn’t want people to dismiss this number under the notion that
Verizon did it, because even if you add Verizon back in, you are still
looking at a weak outcome,” Porcelli said.
Robert Stein, a senior economist at First Trust Advisors initially
was more bullish for the August payroll report, forecasting a headline
payrolls number of 150,000 and private payrolls number of 180,000 but
revised down his forecast to 75,000 and 105,000 respectively after the
Dept. of Labor revised up the number of people on continuing claims
during the week the BLS survey’s for the employment report.
“There was such a huge upward revision to continuing claims in the
survey week we revised downward significantly our forecast for payrolls
to come out tomorrow morning,” Stein said, adding that upward revision
to continuing claims was 112,000.
When asked if the payrolls number tomorrow could influence the
Federal Reserve’s policy, Stein said he thought an above expectations
number could carry more weight.
“I do think in this particular number if we got a number for
payrolls significantly above consensus expectations that would influence
the Fed” Stein said.
Stein continued, saying that there was a lot of turmoil in the
equity markets during the survey week, and their was a pause in the
consumer confidence fueled by the European debt crises.
“If the August number is as bad as it gets in terms of consumer and
business sentiment, things are not that bad and they do not need to do
another layer of quantitative easing” Stein said.
The BLS will release the non-farm payrolls report at 8:30 a.m ET
Friday.
** Market News International Washington Bureau: 202-371-2121 **
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