We expect a 200,000 gain in nonfarm payrolls in July (a bit above consensus), as well as a decline in the unemployment rate to 7.5% (in line with consensus). As far as payrolls are concerned, our forecast would be in line with the 3-, 6- and 12-month moving average.Thursday:
The reason for expecting another strong report is that a number of labor market indicators released for July so far have been encouraging, including manufacturing survey employment indices, consumers' assessment of job availability and the ADP report. Other indicators are sending no clear directional signal relative to June, including jobless claims, online advertising and the effects of the sequester on payrolls.
We expect another small effect of the sequester on employment. Our best guess is a sequester impact of around 5,000-10,000 in the federal government, which might bring the overall reduction in federal payrolls to 10,000-15,000.
• At 8:30 AM ET, the Employment Report for July. The consensus is for an increase of 175,000 non-farm payroll jobs in July; the economy added 195,000 non-farm payroll jobs in June. The consensus is for the unemployment rate to decrease to 7.5% in July from 7.6% in June.
• Also at 8:30 AM, Personal Income and Outlays for June. The consensus is for a 0.4% increase in personal income in June, and for a 0.4% increase in personal spending.
• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for June. The consensus is for a 2.3% increase in orders.
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