Friday’s job report is a wildcard and economist quotes are across the map

On July 19, 2021, workers will machine a screed tower link at the Calder Brothers facility in Taylors, South Carolina, USA.

Branding Ranger | Calder Brothers Corporation | Reuters

Dow Jones consensus estimates that the economy will add about 845,000 salaries in July as the US workforce is slowly rebuilding from a pandemic-induced unemployment.

However, Covid’s uncertainty (rapidly spreading again) has become a wildcard for the labor market, as in the broader economy. NS New infection rates in the United States are approaching 100,000 per day. Faster than last summer when there was no widely available vaccine.

Wall Street forecasts are widespread for the July Employment Report, which will be released Friday at 8:30 am EST. For example, Wilmington Trust economists expect salaries of only 350,000, while Jeffreys economists predict that 1.2 million additional jobs will be added.

“The range is 1.2 million to 350,000, which shows little confidence in these numbers,” said Michael Schumacher, director of interest rate strategy at Wells Fargo.

Employment growth has not lived up to the economists’ previous expectations. Some economists predict that more than a million profits will last for months this spring and summer. Instead, employers are suffering from unfilled openings, and the situation is not expected to improve much until school reopens and extended employment benefits expire in September.

Covid’s rapidly expanding delta variant may not have affected the July report. But economists say it can slow economic growth and affect employment. If individuals become afraid to move around the economy again, new restrictions will be set or schools should be closed again.

Employment data is also the key to the Fed’s decision on when to move to delay bond purchases, the first step in rolling back that simple policy, and a precursor to interest rate hikes. Federal Reserve Board Chair Jerome Powell said last week that he would like to see some strong employment reports before the Federal Reserve begins to cut $ 120 billion in monthly purchases of financial and mortgage securities. rice field.

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“You won’t know much about labor market equilibrium until the employment report is released in October,” Schumacher said.

According to Dow Jones, the unemployment rate is expected to drop from 5.9% in June to 5.7%. The average hourly wage is expected to increase by 0.3% month-on-month and 3.9% year-on-year.there were 850,000 jobs were added in June.

“The reason July’s forecasts are so high is that we’ve lost supplementary unemployment benefits in 25 states, and billing in those states has dropped significantly,” said Aneta Markovska, chief financial economist at Jeffreys. Said. She added that July usually has a large seasonal decline, which may not appear this year.

Due to the sudden economic outage, more than 22.3 million Americans were dismissed in March and April 2020. As of June, total employment levels are still below 7.13 million levels in February 2020.

“I was looking for a fairly healthy figure from 850,000 to 900,000 and an unemployment rate of about 5.7%,” said Kathy Jones, a fixed income strategist at Charles Schwab. “The main reason we expect a fairly large number is that we expect some of our educational jobs to come back. July is a bit early, but some of those numbers Seen. It could add 400,000 or so. Seasonally adjusted probably it will be amplified a bit too. “

Jones said he expects hiring to be strong in the coming months.

“We have expected the July, August, and September periods to be quite strong between school reopenings … Job recovery as a result of the American bailout program. All of this should contribute to a fairly strong July, a series of figures for August and September. ” “Obviously, the delta variant is a wildcard.”

According to Johns Hopkins University, the United States reported an average of about 94,000 new cases over a seven-day period as of August 4, an increase of 48% over a week ago.

Luke Tilly, chief economist at Wilmington Trust, said his low forecasts were based on the signs of slowing growth seen in high-frequency data. “I think the current rate of execution is about 500,000. It looks like it was a little overheated last month,” Tilly said.

Other recently released data show that employment conditions are mixed.

BMO bond strategist Ben Jeffrey says the half-dozen indicators he sees are leaning towards strong numbers, while others show that they aren’t. For example, ADP’s monthly private sector salary report for June has weakened. With 330,000 jobs against the expected 683,000.. However, employment in the ISM services sector recovered from 49.3 to 53.8. Anything over 50 indicates an extension.

“NS [nonfarm payrolls] It’s always one of the hardest numbers to predict before a pandemic and adds all the nuances of current recruitment. That makes it even more difficult. “

Jeffrey said the government’s investigation week on the July report, including July 12, may not reflect the impact of concerns about delta variants. “Whatever the number, it would be terribly depressed by the fact that during the study week, concerns about delta variants were less pronounced than during the current or August study period,” he said.

As such, he does not expect significant bond market movements unless the report approaches one extreme end of the forecast range.

Friday’s job report is a wildcard and economist quotes are across the map

Source link Friday’s job report is a wildcard and economist quotes are across the map

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