July NFP: Solid Labor Markets Bring September To The Fore - Barclays
Nonfarm payroll growth came in at a robust 255k in July, outstripping both our (200k) and median consensus expectations (180k). Job growth for the prior two months was revised higher by 18k net, with June employment gains now reported at 292k.
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The establishment survey was strong across the board, with goods sector employment up 16k and service sector employers adding 201k; these private sector gains were further boosted by +38k in government job gains. The household survey shows an unemployment rate unchanged at 4.9%, as robust household employment was offset by a further rise in labor force participation. Finally, wage growth (0.3% m/m, 2.6% y/y) continued to firm modestly, and the workweek (34.5, previous: 34.4) ticked up for the first time since January. On the whole, this morning’s strong July employment report indicates that labor market health remains intact and, in our view, reduces near-term recession risk for the US economy. Furthermore, the print should boost FOMC members’ confidence in the outlook, especially following the unexpected weakness in Q2 GDP.
We continue to expect the Fed to hike rates at its September meeting, and we look to Chair Yellen’s appearance at the Jackson Hole Policy Symposium on August 26 for confirmation of this view.
