US: Private payrolls forecasted to grow by 190k in August - Nomura

Research Team at Nomura, notes that the US nonfarm payrolls increased by 255k in July, coming in well above market expectations and the 150k per month average gains seen in the prior 3 months.

Key Quotes

“The pace of job gains reaccelerated in the last two months after an abrupt slowdown in May, squashing concerns that the disappointing May employment number was a signal of a broader economic slowdown.

Our private payrolls tracking model is currently forecasting a gain of 201k jobs in August. The latest reading of national business employment indicators suggests steady employment activity, and claims data remain at historically low levels. Taking these inputs into account, we forecast that private payrolls grew by 190k in August. We expect an additional 10k workers to be added to the public sector, bringing the total gains in nonfarm payrolls in August to 200k. On manufacturing payrolls, regional business surveys suggest employment activity was weak in August. As such, we forecast a decline of 10k in August following a better-than-expected gain of 9k in July.

We think that another solid month of job gains should absorb enough slack in the labor market to push the unemployment rate down 0.1pp to 4.8% from 4.9%, previously. Elsewhere, we forecast that average hourly earnings grew by 0.2% m-o-m (2.5% y-o-y) in August.”