The main market sensitivities over the coming week will be around nonfarm payrolls, expected rate hikes by four central banks.
Forecasts start at 290k with Scotia bank for July’s gain in nonfarm payrolls and with stable unemployment rate at 3.6%. If that’s anywhere in the right ballpark then it will be taken as a further sign of near-term resilience while saying nothing about where the economy is headed since jobs are a contemporaneous indicator and the unemployment rate is typically a lagging indicator. The drivers of the call are pretty shaky though.
Small business hiring sentiment gauges have recently been weakening (chart 2). Job vacancies have slightly declined and it’s probably reasonable to think that some of the ones that are still up are zombie postings with less of a desire by employers to fill them as the economy softens (chart 3). Consumers are indicating that jobs are not as plentiful as they were a few months ago (chart 4). We won’t get the latest employment subindices for either the ISM-manufacturing or ISM-services gauges until next week but both have been deteriorating for several months and have pushed into contraction territory