US: Key reports next week include NFP - Danske Bank

Next week, the key economic report in the US will be non-farm payrolls. Analysts from Danske Bank expect a small setback in job growth in August, while they see the unemployment rate and wage growth broadly unchanged. Also the ISM PMI will be released. 

Key Quotes: 

“In the US, the ADP employment change in August is due for release on Wednesday. For 82 consecutive months, employment has risen and the latest jobs reports from June and July showed employment gains of 231,000 and 209,000, respectively. However, the latest ADP report for July reported 178,000, which was slightly below the estimate of 185,000. In August, we expect ADP employment to rebound up to 185,000. The second GDP estimate for Q2 is also due for release on Wednesday but we expect no significant revisions in the figure.”

“On Thursday, we get PCE inflation figures for July. The CPI reported a 1.7% y/y increase in July, slightly below the estimate of 1.8% but higher than June’s figure of 1.6%. PCE tends to follow the development in CPI, so we believe PCE also saw a slight rise in July to 1.5% y/y.”

“On Friday, the August jobs report is due for release. Focus remains on the unemployment rate and wage growth as these remain crucial for the Fed’s decisions on quantitative tightening. In line with the continued growth in employment, we expect further declines in the unemployment rate. However, we expect wage growth to remain around current levels for some time and to fail to show a significant pickup as the second round effects of several years with low inflation are dragging wage growth.

“The ISM manufacturing PMI is also due for release on Friday. After increasing to 57.8 in June, the ISM manufacturing PMI declined to 56.3 in July. The decline was led by a slowdown in new orders, production and employment but the high levels still witness expanding activity.”