United States

July employment report: Demand for workers remains strong

WEEKLY MARKET COMMENTARY  | 

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We expect a net gain of 198,000 in total employment and a decline in the unemployment rate to 3.9 percent in the July estimation of U.S. non-farm payrolls by the Bureau of Labor Statistics. It is important to note that the July employment report is typically full of seasonal quirks so the risk to our forecast is a modestly slower pace of change in total employment. Thus, we expect a muted reaction to the employment report as both investors and firm managers move into the sleepy summertime environment of long holidays and beach reading.

A major narrative to emerge from the July report will be the solid, if not spectacular, growth in average hourly earnings, which we expect to advance 0.3 percent on a monthly basis and 2.7 percent on a year ago basis. Our major concern here is that the median worker is falling behind in real terms due to rising inflation.

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