|

Economics week ahead

U.S. week ahead

Employment • Friday

Labor market conditions appear to have been little changed in July. Nonfarm payroll growth averaged 92K over the first half of the year, and we look for a similar 95K increase in July. Small business hiring plans improved in June and initial jobless claims moved lower between survey weeks, suggesting layoffs remain limited. But, not all the July labor data are pointing in a positive direction. Indeed job postings are hovering below year-ago levels, while ADP's measure of weekly private-sector payroll growth has slowed since the spring.

Tepid labor demand has been accompanied by slower labor supply growth, helping to keep the labor market in balance. We expect the unemployment rate to hold at 4.2% in July. That said, June's sharp decline in prime-age labor force participation looks difficult to square with broader economic conditions and may reflect some greater-than-usual monthly volatility in the household survey. The potential for a rebound in the labor force participation rate creates some upside risk for the unemployment rate.

Wage growth should remain consistent with a labor market that is not generating meaningful inflation pressure. We forecast average hourly earnings to rise 0.3% in July, holding the year-over-year rate at 3.5%. Taken together, the report should reinforce the view that labor demand and labor supply have cooled in tandem, leaving the labor market broadly stable.

Download the Full Report!

Author

More from Wells Fargo Research Team
Share:

Editor's Picks

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation
We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”
9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?
The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.