After a “significantly better than expected” ADP employment report, Goldman Sachs has raised its estimate to 200,000 for the U.S. Labor Department’s December nonfarm payroll report due Friday, the firm’s team of economists said. Separately, initial jobless claims were higher than expected for the most recent week, but the Labor Department reported some holiday distortions, the economists noted. “Overall, the data since our preliminary estimate last Friday have been strong enough to prompt us to revise up our forecast for nonfarm payrolls to 200,000,” the economists concluded.
Goldman wasn’t the only firm to revise its estimates. Jeoff Hall, Thomson Reuters’ resident economist, counted as many as five, though not all of the forecast changes hinged solely on ADP.
The ADP report showed private payrolls expanded by 215,000 jobs in December, easily topping a median forecast of 140,000. Initial jobless claims totaled 372,000 in the week ended December 29, slightly more than expected.
Medium-sized establishments accounted for the largest share of the ADP gain, Goldman’s economists observed. By sector, construction employment rose by an unusually large 39,000 – the largest monthly gain since 2006 – while employment in trade and transportation employment (+53,000) and professional and business services (+37,000) also rose, they said. In addition to the better-than-expected December figure, the November gain in private jobs was revised upward from 118,000 to 148,000, they noted.
“As a result of the stronger-than-expected ADP data, the increase in the manufacturing ISM employment index, and a solid gain in online help-wanted advertising, we are revising our forecast for the change in December nonfarm payrolls to +200,000 from +175,000. Our forecast for the unemployment rate stays at 7.7 percent,” Goldman’s economists said.
