US July Employment Report: A Preview

Today, the BLS will publish July Employment report and it will give more details regarding the labor market situation. The Bloomberg consensus expects nonfarm payrolls to decrease by 10K in July to 185K and unemployment rate to reach 7.5%, down from 7.6% in June.


My conviction is that nonfarm payrolls could be above the consensus in a context where most of proxies suggest better labor market conditions (in line with Fed comments):


1/ (+) During the survey period (2nd week of July), the four-week moving average of initial claims decreased from 348.5K (2nd week of June) to 346.5K.


2/ (-) On the same period, continuing claims rose from 2987K to 3003K.


3/ (+) “Employment” component (Hard to get a job minus Plentiful) of the Conference Board rose from -25.8 in June to -23.3 in July.


4/ (+) The ISM manufacturing employment index increased in July to 54.4 from 48.7 in June confirming the trend recorded by the regional surveys (New York, Philadelphia, Dallas…)


5/ (+) The ADP employment report showed an increase of 200,000 private sector payroll jobs in July up from 198K in June. Prior ADP Employment Change revised higher from +188K to +198K.


6/ (-) Online advertised vacancies dropped 92,200 in July to 4,888,100, according to The Conference Board Help Wanted OnLine (HWOL) Data Series just released.


7/ (+) Gallup’s seasonally adjusted U.S. unemployment rate for July is 7.4%, a slight decline from 7.6% in June.

These data sent positive signals as hirings in the manufacturng sector could rebound in July. My feeling is that the climate was again milder in July which could be a boost both for catering, leisure and also construction. Moreover, government hirings could stabilize with improving public finances. As a consequence, I expect a slight improvement in nonfarm payrolls and a number above the consensus.