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22V Payrolls Survey: Labor Market Loosening to Start in August, Survey Consensus around BBG Estimate for Tomorrow

Published on June 1, 2023

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Dennis DeBusschere

Brian Herlihy

Kevin Brocks

Sophia Wang

Quick summary, investors:

Do not expect the labor market to start weakening before August. 65% think August to October is when weakness will show up.
Anticipate employment data tomorrow will be mixed/negligible.
Have a wide range of estimates for Payrolls, but with a median (200k) right around bbg consensus (195k).
Think even a mild Payroll beat would get the Fed to raise rates in June.

Labor Market Loosening Timing: Almost no clients expect the labor market to start weakening before August. 65% think August to October. We would not push back against this timing, but it does suggest a weak payroll report would cause a market reaction.

Labor market loosening starting August is consistent with investors expecting a mixed/negligible reaction to Payrolls tomorrow.

Payroll Estimates: Investors have a wide range of estimates for Payrolls tomorrow. The median (200k) is right around bbg consensus though (195k). Only 2% of our respondents expect Payrolls to come in less than 100k, which is about the level needed to keep the labor market flat.

Fed Reaction: If AHE is in-line, 46% of our respondents think a modest Payrolls beat (< ~50k) would get the Fed to raise rates in June. FYI, Payrolls have beat by 50k or less 8 of the prior 12 releases. 30% think a Payrolls >300k will cause a June rate hike.

If Payrolls are in-line, a plurality of investors (26%) are looking for an AHE ~4.6% to get a Fed hike. 22% think AHE would have to come in >5%, a high bar. 19% think a miss (>4.4%) would still do the trick.

Most Important Indicator: Our survey respondents are most closely watching AHE and Payrolls.

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