US NFP preview: Forecast in line with expectations - Danske

Analysts from Danske Bank, forecast that non-farm payroll rose by 175K in July in line with expectations.

Key Quotes:

“We estimate non-farm payrolls rose 175,000 in July in line with consensus of 180,000, both significantly lower than the large increase in June of 287,000. Changes in non-farm payrolls are very volatile by nature so the large increase in June only partly offset the weak jobs reports in April and May, as the three-month average monthly increase in non-farm payrolls in June was only marginally below 150,000.”

“Overall employment growth has levelled off this year compared with the past couple of years, despite the strong June report. This could be a sign that hiring has slowed, as we are close to full employment, meaning that employment has become more expensive and it is more difficult to find employees with the right qualifications.”

“We estimate average hourly earnings increased 0.2% m/m in July in line with the recent trend implying an annual growth rate of 2.6%. Average hourly earnings fluctuate a lot but, in general, we have seen a pickup in wage growth since the beginning of 2015, as the labour market has continued to tighten. This said, wage inflation is still subdued. We estimate the unemployment rate was unchanged at 4.9%.”