Goldman Sachs economist Jan Hatzius lowered the bar for the U.S. employment report on Friday, forecasting a gain of just 125,000, which is below consensus estimates of about 170,000. From December through March, the economy has added an average of 177,250 jobs each month, CNBC notes.
To Hatzius it’s “payback” time.
Specifically, he thinks that jobs reports for the past few months have been inflated by early spring weather, and those gains are going to have to be “paid back” in lower numbers in later month.
“Next weekÂs data are also likely to look soft. We are forecasting a nonfarm payroll gain of just 125,000 in April because we expect a substantial payback for the warm winter. As shown in the bottom chart on the right, the payroll acceleration in the winter was confined to the normally cold states. Moreover, the fact that March payroll gains in the cold states looked similar to the pre-winter norm suggests that most of the payback has yet to occur.”
And after GDP rose a disappointing 2.2% in the first quarter, Hatzius sees more of the same ahead.
“Other reasons to expect continued softness in growth include the fact that inventory accumulation has accelerated and final demand growth is still sluggish. Overall, we therefore remain comfortable with our forecast that real GDP growth will average 2% in Q2/Q3 and expect the CAI to converge to similar levels.”
