Key indicators of a strong economy are steady wage growth and strong employment. However, predicting these metrics can be difficult, as it is influenced by a variety of factors such as job market conditions, productivity, labor force participation and inflation. We leverage a number of macroeconomic indicators and survey data about people's perceptions of the labor market to predict wage growth and payrolls in America.
Our estimate for Nonfarm payrolls is a 291k increase month over month with a forecast error of +/- 86k jobs. This is higher than the median consensus estimate of 200k, once again showcasing the trend of economists underestimating the strength of the labor market.
Our estimate for Average Hourly Earnings is an increase of 42 bps month over month with a forecast error of +/- 4 bps, in line with the median consensus estimate of 40 bps. Our corresponding year over year estimate is 5% with a forecast error of +/- 4 bps, also in line with the median consensus estimate of 5%. While we believe the job market remains robust, wage growth does seem to be moderating.