US: Solid hiring activity to start off Q3 – Nomura

Analysts at Nomura note that the US payroll employment growth slowed somewhat in July, registering 157k after an upwardlyrevised 248k gain in June (Nomura: 195k, Consensus: 193k), but net revisions to payroll growth totaled +59k over the past two months, indicating steady employment growth momentum.

Key Quotes

“The underlying details of the payroll report indicate that momentum remains firm for employment growth besides some idiosyncratic moves from certain industries. In some sense, the back-to-back readings of +200k employment growth, well-above the sustainable pace, indicated the potential for a below-consensus reading for July. However, given some of the idiosyncratic negative moves this month, it is possible that payback during August could result in another +200k gain.”

“Average hourly earnings (AHE) increased 0.26% m-o-m in July, close to expectations (Nomura: 0.22%, Consensus: 0.3%), leaving the y-o-y rate unchanged at 2.7%.”

“The unemployment rate fell 0.1pp to 3.9% in July, matching expectations. Household employment jumped strongly by 389k, compensating for lagging behind payroll growth in recent months. The labor force participation rate (LFPR) remained at 62.9% in July following a 0.2pp jump in the prior month.”