Investing.com -- Wolfe Research published its August payrolls preview on Tuesday, projecting nonfarm payrolls growth of 65,000 jobs compared to the consensus estimate of 55,000. The firm expects the unemployment rate to increase to 4.16% from 4.09% in July, with average hourly earnings growth of 0.35% month-over-month.

The forecast includes 75,000 private payrolls and a decline of 10,000 in government hiring. Wolfe estimates the underlying hiring trend remains 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 jobs in June and July respectively. Wolfe attributes this weakness to seasonal factors and a reversal of World Cup effects. The firm anticipates seasonal tailwinds starting in August could support hiring in this sector, projecting a gain of 5,000 jobs.

For wage growth, Wolfe forecasts 0.35% month-over-month in average hourly earnings versus the 0.2% consensus, slowing to 3.1% year-over-year from 3.2% last month. The firm notes that the August survey week includes the 15th of the month, capturing mid-month pay increases.

Wolfe expects the unemployment rate to rise to 4.16% due to anticipated volatility in Household Survey data. The labor force has declined by approximately 2.5 million this year, with 1 million of that decline occurring in the past two months.

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

Wolfe stated that given the September Federal Open Market Committee decision largely depends on upcoming inflation data, with Producer Price Index data scheduled for September 10 and Consumer Price Index data for September 11, a large surprise would be needed for the payrolls report to materially change market pricing.