Goldman’s muppet crushing ways continue.
Recall that just three days before today’s deplorable jobs number, Goldman revised its payrolls forecast higher, saying that “we expect a 240k gain in nonfarm payroll employment in April. We increased our forecast from an initial estimate of 225k published last Friday as a result of the improvement in the employment component of the ISM non-manufacturing survey released this week.”
Oops.
Well, jobs is not all that Goldman was wrong about, and moments ago the bank that was convinced the Fed would hike rates at least three times in 2016 just threw in the towel, and no longer see a June rate hike, instead forecasting that the next rate hike will take place in September. As a reminder, the market no longer see any rate hikes in 2016, which is of course par for the course not only for the “one and done” Fed, but for Goldman which come rain or shine is certain to keep steamrolling muppets.
Full Goldman note:
Soft April Employment Report, Change in Fed Call
BOTTOM LINE: Nonfarm payroll employment increased by 160k in April, less than expected by consensus forecasts. Average hourly earnings gained 2.5% from a year earlier. The unemployment rate was unchanged at 5.0%. In light of weaker-than-expected payrolls and recent Fed communication, we no longer expect a rate increase at the June FOMC meeting. We now forecast the next rate hike will come in September.
MAIN POINTS:
1. Nonfarm payroll employment increased by 160k in April, less than expected by consensus forecasts. Employment growth for the prior two months was also revised down by a net 19k. The deceleration reflected a pullback in construction (+1k vs +41k previously), retail (-3k vs +39k) and government (-11k vs +24k). Payback from weather-related gains in payrolls in earlier months may have depressed employment growth last month, particularly in the construction sector. Other details in the establishment survey were slightly more encouraging.
2. Average hourly earnings rose 0.3% in April (vs. +0.3% consensus) and were up 2.5% on a year-on-year basis, an increase from 2.3% in March. The year-over-year increase was boosted in part by upward revisions to February months. Average weekly hours rose to 34.5 after two months at 34.4 and aggregate weekly payrolls—the product of employment, average hourly earnings, and average weekly hours—rose 0.8% on the month.
3. The household survey showed a 316k decline in employment in April, following a string of very strong gains in recent months. Despite the decline in employment, the unemployment rate remained at 5.0% (4.984% unrounded) due to a two-tenths decline in the labor force participation rate to 62.8%. The U6 underemployment rate fell 0.1pp to 9.7%, mostly due to a decline in involuntary part-time employment.
4. With payrolls, unemployment claims, consumer sentiment, vehicle sales, and a number of business surveys in hand, our preliminary read for the April Current Activity Indicator is +2.0%, up from +1.9% in March.
5. In light of weaker-than-expected payrolls and recent Fed communication, we no longer expect a rate increase at the June FOMC meeting. We now forecast the next rate hike will come in September.
via http://ift.tt/1s010Ha Tyler Durden