The one reason Goldman Sachs thinks Friday's jobs report could be massive
In a note to clients ahead of the report, Goldman economist Chris Mischaikow writes that the availability of jobs is a factor pointing toward Friday's August jobs coming better than expected.
According to Mischaikow, data from the Conference Board showed that, for the first time since early 2008, the spread between the share of households reporting jobs are plentiful against those reporting jobs are hard to find went to zero.
This basically means that, for everyone who thinks it's easy to find a job, an equal number think it's hard, a measure that had been tilted in favor of those struggling to find work for the past several years.
And so this indication, in Goldman's view, shows a labor market coming back into balance.
The Bureau of Labor Statistics' JOLTS report, which shows the number of job openings, has been a widely cited indicator arguing for a labor market that is back near full employment.
And for most of this year, the number of job openings has exceeded the number of hires.
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As for factors indicating that Friday's report could disappoint, Mischaikow noted that the August jobs report has traditionally disappointed on initial release - something other economists have also noted - and also said that online job ads declined in August, potentially indicating that Friday's report could fall short of expectations.
Goldman's house view for the jobs report is for headline employment to fall short of expectations with nonfarm payrolls growing by 190,000. Wall Street is looking for payroll growth of 217,000.
On the wages front, Goldman expects that wages grew 0.3% in August while it sees the unemployment rate ticking down to 5.2%.
In our big jobs preview, we noted that this report is really all about the Federal Reserve and whether a strong jobs report will push the Fed to look to raise interest rates in September.
Goldman, for its part, thinks that ship has sailed and that the most likely date for a Fed rate hike is December.