Skip to main content

The Globe and Mail

Friday’s U.S. payroll report likely to surprise

The widely-obsessed-over U.S. non-farm payrolls (NFP) jobs report will be released this Friday and thankfully, the Goldman Sachs economics team was nice enough to provide tools for us to make a prediction.

In a recent research report, Goldman Sachs highlighted the high degree of correlation between non-farm payrolls and the employment component of the ISM survey of non-manufacturing companies. Since the ISM survey was released on Jan. 6, the results should help project Friday's market-moving payrolls release.

The chart below shows how well this works. NFP has followed the three-month moving average of the ISM employment survey with an R-squared of 0.76 – showing an extremely high correlation.

ISM Non-Manufacturing Employment 3MMA vs Non-Farm Payrolls

(3MMA = 3 month moving average)

SOURCE: Scott Barlow/Bloomberg

The last ISM data point was 55.8, which pushed the three-month average higher to 54.8 (a reading of 50 indicates an increase in hiring). The historical trend suggests that the NFP number will be above last month's, which saw 200,000 workers in new jobs.

The consensus estimate for Friday's release is a 195,000 increase in hiring. The ISM report implies a high probability that NFP will generate a positive surprise, and move U.S. equities higher.

Story continues below advertisement

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to