NFP Preview: Forecasts from seven major banks for July jobs report, estimates vary more than usual

The Nonfarm Payrolls report is set to show an increase of 870,000 jobs in July, similar to levels seen in June. The Unemployment Rate is set to fall from 5.9% to 5.7% and wages annual wage growth to advance from 3.6% to 3.8%. 

Here you can find the forecasts by the economists and researchers of seven major banks regarding the upcoming employment data.

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CIBC

“Job creation likely heated up in the US in July as higher wages along with recruitment efforts could have paid off for employers in service sectors.It’s likely that hiring accelerated to 1010K in July, pushing the unemployment rate down to 5.6%. We’re above the consensus which could be supportive for the USD and bond yields.”

SocGen

“We see another strong US employment report for July (825K jobs). We look for the unemployment rate to fall in July after the surprising increase in June to 5.9%. Job gains from the household employment report used in the unemployment rate calculation were flat. Historically, household employment readings are choppier. We expect a much larger gains for July that, when averaged out, show similar trends to the NFP report.” 

NBF

“Hiring should have continued at a strong pace in the month, as the improving epidemiological situation allowed the re-opening of broad swathes of the economy. Layoffs, meanwhile, could have gone down a bit, judging from the decrease in initial jobless claims between the June and July reference periods. All told, payrolls may have increased 750K in the seventh month of the year. The household survey is expected to show a stronger gain after a lackluster result the prior month, a development which could lead to a three-tick decrease of the unemployment rate to 5.6% (assuming the participation rate recovered some of the ground lost during the pandemic).”

Deutsche Bank

“We are forecasting that NFP will have risen by +1M in July, which would be the fastest pace of job growth since last August. And in turn, we see that bringing the unemployment rate down to a post-pandemic low of 5.6%. July is a seasonally weak month for hiring so the seasonal adjustment is strong. In a year as unusual as this there is high uncertainty as to what impact the seasonals will actually have. So it’s clear that the margin for error could be high.”

TDS

“Payrolls probably surged in July, with the pace up again after a 850K rise in June and 583K in May. Our +1M forecast implies significant further ‘progress’ for Fed officials, but the progress will likely still not be viewed as ‘substantial’ enough for tapering and we don't expect the data for August to be as strong as the data for July. We forecast another 0.3% MoM rise in average hourly earnings. The 12-month change is likely to rise again to 3.8% from 3.6% in June.”

ING

“With many states having ceased these extra unemployment benefits, the pool of available workers should in theory be on the rise and we are hopeful that we can see payroll growth around the 900K mark. As schools return to in person tuition in September this pool should increase further, and we expect to see significant jobs growth that will be the catalyst for an eventual December QE taper announcement.”

Citibank

“We expect an increase in employment of 1.15 M in July, the largest increase since August 2020 and one that would take the total number of jobs still lost compared to pre-pandemic levels to about 5.6 M. If seen, this would keep the pace of job growth well within the necessary range to achieve ‘substantial further progress’ by year-end.”