US NFP example:
- Consensus forecasts seeking job growth of +250K, while the unemployment rate (U3) is expected to remain at 3.6%.
- With rate markets consider another 75 bps rate hike in Septemberis the demand for risky assets – stocks, commodities – good news bad news?
- Will July’s US Jobs Report Change the Federal Reserve’s Rate-Raising Path? We will discuss these questions and more in the context of the July US Nonfarm Payrolls report from 8:15 EdT/12:15 pm GMT. You can join live by watching the stream at the top of this note.
Good news is bad news? Or…
A recession in the US may or may not be headed our way, but the US labor market has remained resilient so far. According to a Bloomberg News survey, the US economy added +250,000 jobs in July, compared to +372K jobs in June, with a US unemployment rate of 3.6%. The employment rate in the US is expected to rise to 62.3% from 62.2%, while the average hourly wage in the US is expected to reach +4.9% yoy from +5.1% yoy.
If “good news is bad news” for risky assets as the Federal Reserve recalibrates its policy stance, then “good news is good news and bad news is bad news” for the US dollar: a strong US job market report could help the Fed -interest reinvigorate hike opportunities; a weak US labor market report could push interest rate cuts forward into 2023, hurting the US dollar.
Atlanta Fed Jobs Growth Calculator (July 2022) (Chart 1)
The US economy continues to make steady progress towards “full employment” as experienced pre-pandemic. According to the Atlanta Fed Jobs Growth Calculator, the US economy will need +334K job growth per month over the next 12 months to return to the prepandemic US labor market with unemployment rates of 3.5% (U3) and 63.4%. employment rate.
We will discuss these questions and more in the context of the July US Nonfarm Payroll Report as of 8:15 EdT/13:15 GMT. You can join live by watching the stream at the top of this note.
— Written by Christopher Vecchio, CFA, Senior Strategyst