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Jobs Will Beat Forecasts but No Rally: Strategist

Goldman Sachs is predicting only 25,000 jobs will have been created in the US last month while the consensus of analyst estimates for Friday’s non-farm payrolls is 75,000.

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Barclays Capital though is predicting the jobs data will beat forecasts.

“The release of the US employment report comes at a particularly crucial moment, with macro indicators continuing to weaken and market worries about the ability of politicians to address the problems facing their economies as high as ever,” said Paul Robinson, the head of FX strategy at Barclays Capital in a research note on Friday.

Barclays is much more bullish than their rivals at Goldman Sachs and is predicting 100,000 jobs will have been created last month.

“That would represent a weak but far from a disastrous report, but it certainly would not allay fears of continued weakening in the economy or stop discussion about potential further loosening by the FOMC in its extended meeting on 20-21 September,” said Robinson who does not believe a forecast beating number will be followed by a rally.

“There have been periods over the past few years when risk appetite dominated the market response, so weak numbers tended to lead to a flight to safe-haven assets, while at other times, the implication for monetary policy was deemed most important,” said Robinson.

“The market is looking for the Fed to save the day, so, perverse though it may seem, might actually seem to welcome a weak outturn. We do not think that is as likely as the consensus does and therefore suggest going into the data in defensive mode," Robinson added.