Wolfe Research sees August payrolls at 65k, above consensus

Investing.com -- Wolfe Research forecasts August nonfarm payrolls will increase by 65,000 jobs, above the consensus estimate of 55,000, according to a preview released Tuesday. The firm projects the unemployment rate will rise to 4.16% from 4.09% in July, while average hourly earnings are expected to grow 0.35% month-over-month.

The payroll forecast includes 75,000 private sector jobs and a decline of 10,000 government positions. Wolfe Research said the underlying hiring trend appears stronger than recent months suggest, estimating it is closer to the monthly breakeven of approximately 65,000, which aligns with the year-to-date average of 61,000.

Leisure and hospitality hiring declined by 43,000 and 40,000 in June and July respectively. The firm attributes this weakness to seasonal factors and a reversal of World Cup effects. Wolfe Research expects seasonal patterns to support the industry starting in August, penciling in 5,000 jobs for the sector.

For average hourly earnings, the 0.35% monthly growth estimate exceeds the 0.2% consensus. This would slow the year-over-year rate to 3.1% from 3.2% in July. The firm notes a positive calendar effect in August, as the survey week includes the 15th of the month, capturing mid-month pay increases.

The labor force has declined by approximately 2.5 million this year, with 1 million of that drop occurring in the past two months. Wolfe Research expects a partial reversal of this decline, which would contribute to the slightly higher unemployment rate.

The firm said market pricing would likely remain unchanged unless payrolls fall outside the 40,000 to 100,000 range or the unemployment rate moves beyond 4.05% to 4.24%. The September Federal Open Market Committee decision is expected to depend more heavily on inflation data, with the Producer Price Index due September 10 and the Consumer Price Index on September 11.

The Bureau of Labor Statistics will release annual benchmark revisions for nonfarm payrolls data on August 28 at 10 a.m. ET. Wolfe Research expects modest upward revisions of around 180,000, or 15,000 per month, as Quarterly Census of Employment and Wages data has been running slightly above the nonfarm payrolls figures.

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