Forecasts for the July Employment Report: A Stall, but Watch State and Local Hiring

The July employment report will be released on Friday, August 7th, at 8:30 AM ET. The consensus is for 1.36 million jobs added, and for the unemployment rate to decrease to 10.7%. There were 4.8 million jobs added in June, and the unemployment rate was at 11.1%.

Here are a few forecasts:

From Nomura:

[W]e expect nonfarm payroll employment to increase 550k during the month, down from 4.8mn in June and 2.7mn in May … , a significant amount of state and local layoffs happened earlier in the year due to COVID-19, pulling forward declines in state and local educational employment that usually take place in July. As a result, seasonally adjusted state and local employment may show an increase during the month. … we expect the unemployment rate to decline 0.2pp to 10.9%
emphasis added

Note the comment on state and local employment. I discussed this seasonal adjustment issue here: Will State and Local Governments Hire 1 Million Teachers in June and July? No, but …   Every July, there is a large decline in state and local education employment.  But this year, many of those people were let go earlier in the year – so the seasonal adjustment might show a large increase in state and local education hiring.

From Goldman Sachs:

High frequency data suggest that the labor market recovery is stalling due to the worsening virus situation. … Our trackers suggest that current household employment has fallen by roughly one million since the June survey week, and that as of July 15 the unemployment rate had risen back up to 11.5% after falling to 10.5% in late June (vs. 11.1% in the June survey).

From Merrill Lynch:

The July jobs report is likely to reveal a pullback in the pace of hiring to +1.0mn after the record 4.8mn increase in June. Real-time data sources point to slowing momentum as new virus hotspots emerged since the last jobs report. There is a large error band around this forecast with even a risk of a negative print. We look for the unemployment rate to head lower to 10.7%.