PREVIEW (UPDATED): US July Nonfarm Payrolls to be released 6th August at 13:30BST/08:30EDT

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July's US jobs report will shape expectations of when the Fed will announce, and then start, the process of tapering its asset purchases. Accordingly, some analysts argue that 'good data is bad for the prospects of continued policy accommodation' may be the play book traders reach for, while others suggest that many of the key debates will not be resolved with the release of the July jobs report, and therefore the event may be subject to the usual post-data knee-jerk reactions, but ultimately do little to materially shift expectations just yet -- it may not be until December when a clear picture emerges on the progress that the labour market is making to meet the Fed's ‘'substantial’ threshold. The consensus looks for 926k jobs to be added to the US economy in July, and if that is realised, it would still mean around 5.84mln fewer Americans employed vs pre-pandemic levels in February 2020. The unemployment rate is seen declining to 5.7% from 5.9%, but more useful colour will be provided by the participation rate (61.6% in June vs 63.2% pre-pandemic), the U6 measure of underemployment (last 9.8% vs 7.0% pre-pandemic), as well as the employment-population ratio (last 58% vs 61.1% pre-pandemic). Average hourly earnings are expected to rise 0.3% M/M taking the annual rate to 3.9% Y/Y, and these measures will be used by analysts to inform the debate on how persistent price pressures in the US are developing. The read from other labour market metrics calls for some caution: ADP's payrolls data disappointed to the downside, while weekly initial jobless and continuing claims data that usually coincide with the BLS survey window rose against expectations of a decline, perhaps relating to seasonal adjustment issues. The Conference Board's gauge of consumer confidence said consumer assessments of the labour market were flat on the month, though consumers were more mixed about the short-term outlook. To download the report, please click here

NOTE: This preview updates on an earlier version released on Monday 2nd August to include the latest ADP National Employment data

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04 Aug 2021 - 13:55- Research Sheet- Source: Newsquawk

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