US NFP Prep
On Thursday, the 2nd of July at 14:00 ET, the BLS releases the US Employment Situation report for June, including Nonfarm Payrolls, Unemployment Rate, and Average Earnings.
This data has been pushed forward by 1 day due to the July 4th US holiday.
Here are some views on what to expect.
General Expectations
Forecasts are subject to change
Nonfarm Payrolls – Forecast: 115k | Prior: 172k | Range: 200k / 25k
Unemployment Rate – Forecast: 4.3% | Prior: 4.3% | Range: 4.3% / 4.2%
Average Earnings YoY – Forecast: 3.5% | Prior: 3.4% | Range: 3.6% / 3.4%
What to Expect
US Stocks
A stronger-than-expected report, with solid payroll growth and firm wage gains, could support equities by reinforcing confidence in economic resilience and consumer spending. However, an excessively strong report could also weigh on rate-sensitive sectors if it pushes back expectations for Fed easing.
A weaker print may pressure stocks by signaling slowing economic momentum, although markets could also interpret softer labour data as increasing the likelihood of future rate cuts.
US Dollar
A robust jobs report would likely support the dollar, as it reduces expectations for near-term Federal Reserve easing.
A softer report may pressure the dollar as markets lean toward a more dovish policy outlook.
US Government Bond Yields
Upside surprises in payrolls or wage growth could push yields higher, reflecting firmer growth and inflation expectations.
Downside surprises generally lead to lower yields as investors price in slower activity and increased odds of policy accommodation.
Federal Reserve Policy
A firm labour report, particularly if wage growth remains sticky, would support a higher-for-longer Fed stance.
A weaker report, especially if unemployment rises or wage growth slows further, would strengthen the case for a more accommodative policy path as labour market slack gradually builds.
Commentary
Credit Agricole
The labour market appears to have improved from last autumn, and that trend is expected to continue into June, even if payroll growth slows to around 105k from 172k last month. That would still be seen as a solid pace in the current environment, with the unemployment rate expected to hold at 4.3% and average hourly earnings seen rising 0.2% on the month, leaving the annual pace steady at 3.4%.
For the Fed, concern about the employment side of the mandate has clearly faded, but the reaction function remains asymmetric. Weaker jobs data could still push the Fed toward cuts, but stronger jobs data does not automatically mean hikes. Instead, a firmer labour market would mainly shift attention back toward inflation.
Société Générale
The week ahead will again hinge on labour market data. Regional Fed business surveys point to strong payroll growth in June, while jobless claims suggest the unemployment rate likely stayed unchanged. If that is confirmed, it would strengthen the view that the labour market has stabilised and may soon begin to show a more visible improvement in the unemployment trend.
That matters because the Fed is now more focused on the inflation side of its mandate. This week’s PCE data reinforced the idea that underlying inflation remains firm, with core services still the main driver and broader underlying measures suggesting PCE inflation has picked back up to around 3% this year. The key question now is whether next week’s jobs data simply confirms labour market stabilisation, leaving the Fed free to stay focused on inflation, or whether it shows enough renewed strength to add even more to the inflation concern.
Previous Release
On June 5th at 08:30 ET, the BLS released the May Employment Situation Report:
US Nonfarm Payrolls Actual 172K (Forecast 88k, Previous 115k, Revised 179k)
US Unemployment Rate Actual 4.3% (Forecast 4.3%, Previous 4.3%)
US Average Earnings YoY Actual 3.4% (Forecast 3.4%, Previous 3.6%)
The stronger-than-expected NFP print triggered a hawkish market reaction, with payrolls rising 172K versus expectations for 88K, while the prior month was also revised higher to 179K. Although the unemployment rate held steady at 4.3% and wage growth cooled slightly to 3.4% Y/Y from 3.6%, the headline jobs beat suggested the labour market remained more resilient than expected.
That pushed the US Dollar and Treasury yields higher as markets pared back some near-term Fed easing expectations. Equities had a more mixed reaction, with ES initially whipsawing as investors balanced the support from stronger growth momentum against the risk that a firmer labour market could keep the Fed cautious for longer.
