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Analysts at Nomura are forecasting a 195k increase in July nonfarm payroll employment of US with 190k from the private sector and a 5k contribution from government.

Key Quotes

“Our forecast is consistent with our Q3 real GDP forecast of 3.2% q-o-q saar and steady underlying economic momentum.”

“Incoming labor market indicators have remained strong. In particular, initial jobless claims registered a multi-decade low of 208k during the BLS survey week (the week containing the 12th of the month). Moreover, regional business surveys showed sustained employment indicators for both the manufacturing and service sectors with only the Dallas Fed service survey and Philly Fed manufacturing survey employment indices falling below their six-month averages. In addition, ADP reported a solid 219k increase in private employment during July, consistent with our forecast of a strong gain.”

“While we expect a solid increase in employment growth, there is some risk that manufacturing employment gains slow somewhat in July from the notable 36k gain in June. Part of the outsized growth in manufacturing employment in June stemmed from a 12k increase in employment at motor vehicles and parts firms.”

“Some of this gain was possibly due to transitory a ramp-up in light truck production following disruptions in May. Moreover, this series can show unusual behavior during the summer months as many auto plants temporarily shut down for retooling.”  

“Looking beyond manufacturing, there is some risk that a 54k increase in private education and health service employment could revert in August. In addition, July can sometimes show volatile changes in government education employment, which could swing the topline nonfarm payroll numbers. However, aside from these idiosyncratic moves, we expect payroll growth to be strong.”

“While weather played an outsized role in forecasting nonfarm payroll employment changes earlier this year, weather effects in June appeared to be minimal and we do not expect any notable effects to be reflected in the July data.”