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22V Survey: Investors Expect Slightly Softer Employment Data than Bbg Consensus

Published on July 6, 2023

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Dennis DeBusschere

Brian Herlihy

Kevin Brocks

Sophia Wang

Quick summary, investors:

On net think employment data will be a bit softer than bbg consensus
- +230k Payrolls (bbg +225k), but with wide estimate bands.
- 3.7% urate (bbg 3.6%)
- 4.1% AHE (bbg 4.2%)
Expect the labor market to loosen in September/October.
- Last month, people expected loosening to start in August.
Are paying the most attention to Payrolls.
- Last month, the focus was on AHE.

TIMING OF LABOR MARKET LOOSENING: A plurality of investors expect Payrolls to first come in less than 100k (the rule of thumb level for the labor market to hold steady) in October. Last month investors thought August (HERE). And now, 30% of the investors we polled think Payrolls won’t come in less than 100k this year.

That’s consistent with 42% of investors expecting tomorrow’s data to be mixed/negligible. Investors do not anticipate tomorrow will be a scene changer. As we mentioned this morning (HERE), that implies some complacency. Mean reversion is a risk here, even though we think the current trend of risk-on, Cyclical leadership with a Deep Cyclical rebound will continue in 2H. It is important to acknowledge that macro influence and volatility remain high, and the economy is still in “Transition” (more HERE).

SURVEY CONSENSUS ESTIMATES: On net, investors expect employment data to be a bit softer than consensus estimates. The median Payroll estimate of our survey respondents is 230k, right around the bbg consensus of 225k. But the estimate bands are wide: 9% think less than 170k, 14% think 200k, 17% think 250k, and 15% think greater than 300k. 225k was actually an unpopular choice.

41% of investors expect the urate to stay at 3.7%. 34% think it’ll drop to 3.6% (bbg consensus).

29% of investors expect wage growth to come in at 4.1%, below bbg consensus of 4.2%. 21% expect 4.2% and 20% expect 4.3%.

MOST IMPORTANT LABOR INDICATOR: Our survey respondents are most focused on Payrolls tomorrow, with AHE coming in second. Last month, that was reversed.

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