Economists wary of being caught out again by US non-farm payrolls number

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It’s the first Friday of the month, so it’s time for the US non-farm payrolls (NFP) report.

The NFP jobs report from the US Bureau of Labor Statistics last month came in way below market expectations with 266,000 jobs added.

“Some economists had expected over one million. The shortfall is being attributed to a shortage of labour, which seems bizarre when the official U3 unemployment rate is 6.1% and the U6 rate is 10.4%,” said analysts at AJ Bell.

“But the theory is that American government stimulus checks and employment support have been so generous many workers are being tempted to stay at home.”

This month, economists have dialled back their forecasts to around 675,000, with plenty also saying wage growth may be the number to watch in Friday’s report.

With US inflation having started to pick up, and many people worried it may rise out of control, market analyst Marshall Gittler at BDSwiss pointed out that a number of Federal Reserve policymakers have said the central bank should start “thinking about thinking about” withdrawing some of their extraordinary monetary stimuli.

In other macro news, the UK is chipping in with new private car registrations for May and the Markit/CIPS Construction Survey.

Pantheon Macroeconomics thinks the former will be down 10% or so on two years ago, after April’s registrations were double the April 2019 level after car showrooms reopened.

As for the latter, the consensus forecast is for a reading of 62.0 for May, up a tad from April’s 61.6.

Lastly, G7 finance ministers meet in London on Friday and Saturday ahead of the June 11-13 G7 Summit in Cornwall.

Significant announcements expected

Economic data: US non-farm payrolls, UK construction PMI

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