Goldman Slashes Non-Farm Payroll Estimates

Goldman Sachs

weighed in on today's ISM data, and then slashed its expectations for tomorrow's key non-farm payroll number. The bank's analysts wrote, "ISM stronger than expected in August, although details of the report are softer than the headline suggests...We are lowering our forecast for tomorrow's nonfarm payroll report to +25k, from +50k previously. The main reason is the accumulation of evidence of weak hiring in late July and August: a sharp deterioration in perceptions of job availability in the latest Conference Board survey, a drop in today's ISM manufacturing employment index, another drop in job advertising, and a soft ADP report. Layoffs seem to have remained low, given steady jobless claims in the 410,000 range, although even here the recent pickup in layoff announcements is a concern." Goldman's note likely contributed to the fizzling out of the initial rally after the ISM number this morning. The market continues to balance the current economic data versus expectations for more quantitative easing, and is likely to remain range-bound on Thursday ahead of tomorrow's NFP number.