• We used to say here: ‘all eyes on US labor market data’. But if consensus is generally right about the increase in headline payrolls, there should be little in the way of market movement. The 711k increase in headline payrolls will bring the Fed closer to the taper announcement, which pretty much everyone these days expects to happen at the September FOMC meeting.
• Is there room for upside surprises regarding payrolls? Theoretically, yes. GDP growth is highly elevated and economic reports such as the PMIs, job openings and the NFIB small business survey suggest labor demand remains incredibly strong. What has been holding back actual hiring is labor supply. But at least one factor is already diminishing: in several states generous pandemic unemployment benefits have expired. By September, across the US these benefits will be a thing of the past.
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