We are forecasting a 25,000-job increase in the monthly Bureau of Labor Statistics estimate of labor conditions and a 4.1% unemployment rate with modest risk of an increase.
Average hourly earnings should show a 0.3% increase on the month which would translate to a 3.1% year-ago increase when the data is released Friday.
We do not think that the August BLS survey will result in either a large enough increase to lock in a September rate hike by the Federal Reserve nor a small-to-negative reading that will be sufficient to take a possible hike off the table.
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For the most part, the song remains the same in the American labor market: The combination of boomers retiring and restrictive immigration policies will continue to result in a monthly breakeven of roughly 35,000 jobs.
As a result, monthly hiring will remain tepid, and in some months go negative, with the unemployment rate staying mostly unchanged. The numbers will reflect full employment conditions even though a select number of people are facing longer-term spells of unemployment greater than 26 weeks.
We are closely monitoring labor force participation of the prime age 25-54 cohort, which has slipped from a cyclical high of 84% to 83.4% during the first seven months of the year.
That ebbing may have to do with an easing in the employment of 25 to 34-year-olds to 82.7% in July from 84.1% in April, which many are examining for clues around the integration of artificial intelligence and particularly its effect on entry-level jobs.
Beyond the deep dive inside the household side of the survey, we expect the establishment element of the monthly jobs report to show a modest increase in goods-producing jobs like construction, ironically thanks to the AI buildout, and another solid increase in lower-paying healthcare jobs.
We think the noise around the World Cup that contributed to the declines in leisure and hospitality will modestly abate but still result in a negative reading, as will government hiring for the third consecutive month.
We do anticipate a modest upward revision to the July employment data.
