As we wait for more news on the debt ceiling vote, a little jobs report preview from Duetsche Bank’s Joe LaVorgna.
Even he’s dour on Friday’s big number, and he’s known as an uber-bull:
The aforementioned services sector index, along with the ADP report on Wednesday, will set the tone for the July employment report on Friday. The 4-week moving average of initial jobless claims is down by only 4k since the June employment survey period, and the moving average for continuing claims is actually up 12k over the same period. In short, the tone of the labour data appears to be little changed from June, which is why we are only modestly more constructive in our July forecast of +50k for total payrolls and +75k for private payrolls. In terms of the unemployment rate, we expect it to remain unchanged at 9.2%. Perhaps more importantly, we are expecting the June decline in the workweek to be reversed in July; and this would considerably soften the sting of what is likely to be an otherwise disappointing report. Finally, after payrolls we expect +$4.0B increase in consumer credit which has been steadily increasing since bottoming this time last year. This positive trend will be largely ignored if the labour data disappoint.