What’s expected:
- Consensus estimate +56K (range -25K to +121K)
- July -23K
- June +63K
- Private consensus estimate +45K
- Unemployment rate consensus estimate: 4.1% vs 4.1% prior
- Participation rate consensus 61.4% prior
- Prior underemployment U6 prior 7.9%
- Avg hourly earnings y/y exp +3.0% y/y vs +3.2% prior
- Avg hourly earnings m/m exp +0.3% vs +0.1% prior
- Avg weekly hours exp 34.3 vs 34.3 prior
August jobs so far:
- ADP employment report +38K (lowest since Jan) vs +47K expected and +46K prior
- ISM services employment 47.8 vs 47.4 prior
- ISM manufacturing employment 51.2 vs 52.5 exp and 52.8 prior
- Challenger Job Cuts 52,881 vs 33,429 prior
- Philly employment +27.9 vs +10.0 prior
- Empire employment +9.3 vs +11.4 prior
- Initial jobless claims survey week 206K vs 187K prior
- Revelio Labs +36.5K vs +79.2K prior
Seasonally, the headline reading is weak in August, according to BMO. It has come in below estimates 71% of the time and beating 29% of the time, by 71k and 18k, respectively, on average. Similarly, 36% of previous unemployment prints for August have been higher-than-expected, 28% have been lower-than-estimates, and 36% have matched the consensus.
August can be a tricky month for seasonal adjustments because of school start times so market participants will generally try to filter out educational jobs and look through them.
The trend has been weakening in jobs lately and last week’s initial benchmark revisions unexpectedly shaved jobs through March.
Still, unemployment is running at just 4.1% and it’s hard to see it as anything but the oft-discussed ‘low hire/low fire’ economy.
In terms of trading, a soft report is the hint from these numbers and that would place further pressure on the US dollar, which is already weak after surprisingly-dovish comments from Fed Governor Chris Waller on Thursday. USD/JPY has also been hit by intervention (though not confirmed) and plunged 330 pips on the day, leaving a turbulent dynamic for FX traders through the report.
In contrast, equities were a more-straightfoward response to Waller and are also benefitting from new AI model releases that are showing another leap forward. A softer jobs report would lift them further while a hot reading could spoil the party.
A clear spot to look for clues is the front end of the bond curve with US 2-year yields trading at 4.33%. For the moment, the market is just under 50/50 for a September rate hike.
This article was written by Adam Button at investinglive.com.