July Employment Preview

On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus is for 175,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.

There were 206,000 jobs added in June, and the unemployment rate was at 4.1%.

From Goldman Sachs:

We estimate nonfarm payrolls rose by 165k in July, below consensus of +175k ... While an influx of labor supply at the start of summer typically leads to an acceleration in seasonally-adjusted job growth when the labor market is tight, alternative measures of job growth indicate a pace of job creation below the recent payrolls trend, and we assume a 15k drag from Hurricane Beryl. ... We estimate that the unemployment rate was unchanged at 4.1%—in line with consensus.
emphasis added

From BofA:

Like the broader economy, the labor market is cooling but not cool. Nonfarm payrolls likely rose by a solid 225k in July after coming in at 206k in June. We look for the unemployment rate and labor force participation rate to remain unchanged at 4.1% and 62.6%, respectively.

• ADP Report: The ADP employment report showed 122,000 private sector jobs were added in July.  This was below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index was at 43.4%, down from 49.3% the previous month. This would suggest about 50,000 jobs lost in manufacturing. The ADP report indicated 4,000 manufacturing jobs lost in July.

The ISM® services employment index has not been released yet.

• Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 245,000 in July compared to 239,000 in June.  This suggests more layoffs in July compared to June.

• Conclusion: My guess is employment gains will be below consensus expectations.