The July US and Canadian jobs reports will be released later today and it is the highlight of the day. It’s a clear case of where ‘bad news is good news’ as the market wants to see some cooling in hiring so the FED and the Bank of Canada (BOC) can slow rate hikes. In addition, there will be a very close watch on wage data as well to see how fast they are growing. They’re not keeping up with inflation and are expected to increase by 0.3% MoM.

Non-Farm Employment Report

• Consensus estimate payrolls +250K
• Private payrolls +230K
• June payrolls were +372K
• Unemployment rate consensus estimate: 3.6% vs 3.6% prior
• Participation rate consensus 62.2% prior
• Prior underemployment U6 prior 6.7%
• Avg hourly earnings YoY exp +4.9% vs +5.1% prior
• Avg hourly earnings MoM exp +0.3% vs +0.3% prior
• Avg weekly hours exp 34.5 vs 34.5 prior

Here’s the July jobs story so far:

• ISM services employment 49.1 vs 47.4 prior
• ISM manufacturing employment 49.6 vs 47.3 prior
• Challenger Job Cuts rose 36.3% in July vs June’s 58.8%
• Philly employment 19.4 vs 28.1 prior
• Empire employment 18.0 vs 19.0 prior
• Initial jobless claims survey week 261K vs 240K last month
• ADP report is not being published at the moment as it’s revamped

According to BMO:

Seasonally, headline payrolls have a slight tendency to outperform with 52% of previous reads beating forecasts and 48% missing by 82k and 60k, respectively. Meanwhile, the unemployment rate has matched or been better than estimates 68% of the time and been worse than expected in 32% of instances

Goldman Sachs estimate:

• We estimate nonfarm payrolls rise by 225k in July (MoM sa), 25k below consensus and a slowdown from the +372k pace in June.
• We estimate that the unemployment rate was unchanged at 3.6% in July, in line with consensus.

GS cite:

• July seasonal factors have become significantly more restrictive—even more so than in June
• and the seasonal adjustment algorithm may be overfitting to the reopening-related job strength in the summers of 2020 and 2021