Goldman's May NFP Preview

A few excerpts from Goldman Sachs' May Payroll Preview by economists Zach Pandl and Elad Pashtan:

We forecast that nonfarm payroll employment increased by 165,000 in May, close to consensus expectations for a 160,000 increase. Payroll growth should be held back by a strike at Verizon Communications, which BLS figures suggest idled 35,100 workers during the survey period.

We expect the U3 unemployment rate to decline to 4.9%, although risks look tilted to the upside. Average hourly earnings likely rose at a trend-like pace of 0.2% last month, slightly below April’s 0.3% gain.
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Verizon strike: According to the BLS Strike Report, the ongoing strike at Verizon Communications idled 35,100 workers during the payroll survey reference week (the BLS notes that this estimate could differ from the final total). The strike will affect two line items in the payroll report: specialty trade contractors (a component of the broader construction category) and telecommunications (a component of the information services category). Based on the Verizon strike in August 2011—which also affected employment in these industry groups (as well as others)—most of the impact should show up in the information services category.

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