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Analysts at TD Securities note that the US Nonfarm payrolls matched expectations, coming in at 164k (TD: 170k; market: 165k, following last month’s downwardly revised 193k print.

Key Quotes

“The 3-month and 6-month averages slowed to around 140k “” still more than sufficient to absorb new entrants into the labor force, but well off the 240k pace in January.”

“The unemployment rate remained unchanged at 3.7% in July despite an uptick in the labor participation rate to 63.0% “” its highest level since March. The underemployment rate dropped two tenths to a new cycle low at 7.0% in July. Separately, average hourly earnings rose 0.3% m/m, above our and the market’s expectations for a 0.2% increase (last moth’s print was also revised up to 0.3%).”

“The annual pace of wage growth inched up a tenth to 3.2% y/y but has remained stuck in the 3.0-3.4% range since August 2018, indicating no evidence of price pressures brewing in the labor market. Average weekly hours slowed marginally to 34.3 in July.”

“Job gains are slowing to a more sustainable pace, while wage growth remains a non-issue in terms of price pressures. We continue to believe the Fed will deliver 25bp cuts in September and October as global growth fears remain present and trade wars are likely to remain in the limelight.”