On Friday, US non-farm payrolls are expected to come in at 192,000 in July, down from 213,000 in June, according to Bloomberg. The unemployment rate is seen dropping to 3.9% from 4% month-on-month. Average hourly earnings are forecast to increase to 0.3% from 0.2% month-on-month and no change is expected year-on-year, holding steady at 2.7%.
‘Non-farm payrolls are notoriously volatile,’ warned Andrew Mulliner, portfolio manager at Janus Henderson, in an interview with IGTV. He said that while the unemployment rate and wage growth are the most important parts of the report, the headline figure is most likely to move the markets. According to him, there could be a repricing in treasuries if the change in non-farm payrolls deviates significantly from 200,000.
This week, the ADP employment report for July beat estimates, coming in at 219,000 versus expectations for 186,000 and a rise from last month’s revised reading of 181,000. The private labour market report is often seen as a precursor to the US jobs report, with some analysts now suggesting that payroll gains could beat the street. Last Friday, the US released impressive growth figures with second quarter (Q2) gross domestic product (GDP) hitting 4.1%, in line with Reuters’ forecasts and marking the strongest reading since Q3 2014, which was driven by consumer and business spending along with strong exports. On Wednesday, the Federal Reserve (Fed) delivered an upbeat assessment on the strength of the US economy, describing jobs, investment and household spending as strong in a statement released after it voted to keep rates on hold. Mulliner told IGTV that the US is likely to be approaching peak growth.