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If recent employment data is any indicator JPM says you should expect a sizable upside surprise in tomorrow’s payrolls data. While the consensus is at 140,000 JPM says we can expect something in the 160,000+ range.  This would certainly mesh with the endless stream of  “better than expected” economic data of late:

“We expect employment to have picked up in December and forecast an increase of 170,000 jobs to private sector payrolls for the month. The private sector added an average of 133,000 jobs each month between July and October before adding an uninspiring 50,000 jobs last month. We expect the disappointing November data to be a hiccup on the path to recovery in the labor market, and we look for renewed strength in the private sector for December.

Private sector hiring should be concentrated in the service sector, where we look for an increase of 175,000 jobs. Temporary help hiring has been a strong contributor to payrolls in recent months, and we expect this to continue into December, driving professional and business service hiring up 50,000. We expect a rebound in the retail sector this month since shopping appeared to be strong leading up to the holidays; we forecast an increase of 10,000 retail jobs after the sector shed 28,000 jobs in November. Health care industries have added about 30,000 jobs each month starting in July, and we expect this trend to continue in December.

Away from the private service industries, manufacturing industries have been shedding jobs in recent months even though the employment measures in the regional manufacturing surveys have indicated increased hiring. On average, these employment indicators held fairly steady in December, and we look for a 5,000 decline in manufacturing payrolls. Construction payrolls have been little changed in recent months, and we forecast no change in construction payrolls for December.

We expect government payrolls to decline 10,000, matching the decline reported for November.

We expect to see some payback in the unemployment rate after the 0.2%-pt increase in November, with a decline from 9.8% to 9.7%. The unemployment rate for the 20-24-year-old age group popped up from 15.2% to 15.9% in November—last year, there was a similar spike in November that was reversed in December. The average workweek should hold at 34.3 hours, and the aggregate hours index should increase 0.2% based on the increased hiring in December. We expect a 0.1% tick up in average hourly earnings after earnings were flat in November; this would be a very slight slowing from the average pace of growth in recent months.”

Update: According to MarketWatch the consensus estimate is now in-line with JPM at 175K.

“Economists polled by MarketWatch are now expecting 175,000 nonfarm jobs created in December, up from 143,000 just a few days ago.”

Source: JPM

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