US nonfarm payrolls growth likely to have weakened in May

The headline payrolls growth in the US is likely to have weakened in May due to a few special factors. However, the underlying is expected to indicate a continuous tightening of the labor market, said Societe Generale in a research report. The ongoing strike at Verizon is likely to have subtracted about 35,000 workers from the overall payrolls tally as the workers have not received any pay in the survey week, added Societe Generale. Moreover, the “management technical consulting” sector is expected to experience a sharp easing in payrolls.

In April, the industry had added a large number of workers (21,000). This was the biggest gain on a monthly basis since recordkeeping started. In the earlier three months, the industry had added an average of 5000 jobs every month.

Excluding the Verizon strike, payrolls in the US is likely to have increased strongly by 175,000. Meanwhile, average hourly earnings are expected to have grown 0.2% m/m and 2.5% y/y. The jobless rate in the US might have dropped slightly to 4.9% from 5% in May, according to Societe Generale.