US: Expect an increase of 175k in nonfarm payrolls - Nomura

Analysts at Nomura are expecting an increase of 175k in US nonfarm payrolls (Consensus: 180k) with 170k from the private sector and 5k from government.

Key Quotes

“In addition, we expect manufacturing employment to increase by 5k (Consensus: 5k).”

“Payroll growth has averaged a healthy 180k per month during H1 2017, just slightly below the 2016 average of 187k. Incoming data suggest this trend will continue in July. Employment indicators from regional business surveys remain well within expansionary territory, although slightly lower than in June. Additionally, the labor market differential index in the Conference Board’s consumer confidence survey has improved over the past four months, while initial jobless claims remain subdued. Continuing claims have ticked up recently, but remain low by historical standards. Payrolls surprised to the upside last month, driven by a sharp 22k increase in local government employment excluding educational services. We do not expect a similar surprise for July.” 

“We expect the unrounded unemployment rate to fall to 4.3% (Consensus: 4.3%). Last month, the unemployment rate rebounded to 4.4% from 4.3%. We highlight that on an unrounded basis, last month’s reading was 4.36%, just barely pushing into 4.4% territory. Thus, it would not take much to drive it back down to 4.3% as strong household employment gains continue. Headline unemployment is low by historical standards, but due to changes in the labor force composition there is still some room for further declines.”

“Average hourly earnings in June were weaker than expected. However, with a tightening labor market, we expect some modest improvement. For July, we expect a 0.33% m-o-m (2.44% y-o-y) increase (Consensus: 0.3%), a slight pick-up from 0.15% in June.”