US: July NFP should show an extending labor market recovery – Wells Fargo

The US official employment report will be released on Friday. According to analysts at Wells Fargo, the report should show an extending labour market recovery. They look for a positive change in employment by 1.7 million, above market consensus. 

Key Quotes: 

“Payroll growth is positioned to remain positive, yet slow materially following the past two months of a rapid rebound. We look for nonfarm employment to add 1.7 million jobs in July. Even with our above-consensus call, that would still leave employment 8.5% below its pre-pandemic level.”

“Forward-looking employment indicators have been mixed, with initial jobless claims remaining stubbornly high on one hand, and business surveys suggesting varying degrees of ongoing improvement in hiring on the other hand.”

“We expect the July employment report performance to be positive, extending improvement in the U.S. labor market. That said, questions around the strength and duration of the economic rebound are increasing given the recent surge in new virus cases in the Sun Belt states. This has intensified the uncertainty about whether state & local economies can continue to recover, keeping the markets’ focus squarely on the dashboard of labor market indicators.”