The big event this week is Friday’s Non-Farm Payrolls report.
People are expected a number a bit south of 200K, but it’s possible we could see something much stronger. And the implications are significant, since this is one of the last jobs reports before the September FOMC meeting, when the Fed is likely to start slowing the pace of bond purchases (the taper).
Anyway, here’s one interesting nugget that suggests that we’re likely to see a strong number.
Following yesterday’s consumer confidence report, Morgan Stanley observes
The current conditions index jumped 5 points to 73.6, high since May 2008. The percentage of respondents saying jobs are currently “plentiful” rose to 12.2% from 11.3%, and the percentage saying jobs are “hard to get” fell to 35.5% from 37.1%. That left the net result on this question 2.5pp higher at -23.3%, high since September 2008. This question matches up well with trends in actual labour market conditions over time, so these results were a positive indication for the July employment report. Our initial forecast (which we’ll take a look at after the ADP report) was for a marginally slower 185,000 gain in nonfarm payrolls in July and downtick in the unemployment rate to 7.5%. Improved confidence in prospects for finding a job is probably going to continue to bring back more discouraged workers back into the labour force, slowing the decline in the unemployment rate relative to an improved pace of job growth.
Remember, consumer confidence was a slight miss, although probably not anything to get excited about either way.
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