US' non-farm payrolls in May likely to rise; will give direction to Fed

The United States non-farm payrolls for the month of May, to be released today is likely to rise since the Verizon strike which has affected pay of many workers did not come into consideration during the survey period. Also, today’s payroll figures will provide direction to the Federal Reserve whether or not to hike interest rates.

Non-farm payrolls are expected to rise by 150,000 private payrolls to expand by 145,000, and government payrolls to grow by 5,000, Barclays reported.

US’ ADP firm payroll figure, a pre-cursor to today’s data release came in on consensus at 173,000, but this may not have been adjusted for the mobile phone firm Verizon strike, which the Bureau of Labor Statistics has already said will remove approximately 35,000 workers from May. This further supports the view that NFP will come in at below 200,000.

According to Barclays, workers must have received pay for at least part of the pay period during the survey week that includes the 12th of the month, given that the Verizon strike began on Apr 13 and continued through end of May.

"Our forecast implies headline payroll growth net of the Verizon strike in the range of 175-200k, which would represent a modest rebound after last month’s disappointing report," Barclays mentioned in its research report.

The May employment report is likely to foresee a one-tenth decline in the unemployment rate to 4.9 percent and for average hourly earnings to rise by 0.1 percent m/m (2.3 percent y/y), the report said.

"Finally, we look for average weekly hours to remain steady at 34.5," Barclays commented.