HEADS UP: Here's What To Expect From Today's Jobs Report

The Bureau of Labour Statistics will release the July jobs report at 8:30 am ET.

Here are the numbers Wall Street is looking for:

  • Change in nonfarm payrolls: +230,000
  • Unemployment rate: 6.1%
  • Average hourly earnings, month-over-month: 0.2%
  • Average hourly earnings, year-over-year: 2.2%
  • Average weekly hours worked: 34.5

Expectations are for jobs added to fall from the 288,000 added in June, which blew away expectations. The June report also showed the unemployment rate fell to 6.1%, its lowest level since September 2008.

In June, the labour force participation rate remained at 62.8% for the third straight month.

Recent Data

The latest jobs report comes following a busy week for economic data, with a better than expected GDP report, the latest monetary policy decision from the Federal Reserve, as well as two employment reports: ADP’s private payrolls and initial jobless claims.

On Wednesday, second quarter GDP numbers showed the economy grew at an annualized pace of 4% during the quarter, better than the 3% that was expected by economists.

The Fed’s policy announcement, also on Wednesday, showed it is continuing to move closer to concluding its quantitative easing program, taking another $US10 billion off its monthly asset purchase program while keeping interest rates near 0%.

As we noted earlier this week, however, the Fed has mostly dismissed the hard data that comes from the jobs report, opting to look at a range of labour market factors. And with its policy announcement Wednesday, the Fed said, “a range of labour market indicators suggests that there remains significant underutilization of labour resources.”

Wednesday morning also saw the release of ADP’s monthly private payroll report, which showed employers added 218,000 jobs in July, fewer than what was expected. Thursday morning’s initial jobless claims report showed 302,000 people filed for initial jobless claims.

The latest employment cost index report from the Bureau of Labour Statistics released Thursday morning also showed that compensation costs for civilian workers were up 0.7% in the three months ending in June. For the twelve-month period ending with June, compensation costs were up 2%.

Wall Street’s View

Aneta Markowska and her team at Societe Generale said in their preview of the jobs report that, “market participants should once again be prepared for a very healthy employment report.”

Markowska sees July payrolls growing by 280,000, currently the highest among Wall Street firms followed by Business Insider, and sees the unemployment rate falling to 6% with hours worked holding steady at 34.5.

At Nomura, Lew Alexander sees the economy adding 255,000 jobs in July. Alexander said that the ADP report did not prompt him to change his view, but does suggest a downside risk to his forecast.

Alexander also sees the unemployment rate falling to 6%.

Analysts at Barclays see payrolls coming at 225,000, and at Deutsche Bank, Joe LaVorgna sees payroll gains coming at 250,000.

Chris Rupkey at Bank of Tokyo Mitsubishi is expecting the report to be in-line with expectations at 230,000, but would not be surprised if the unemployment rate falls to 6%.

“The economy is stronger than you think,” Rupkey wrote. “Bet on it.”

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