On Friday, August 5 at 0830EDT/1230GMT the US is expected to report a July non-farm payrolls (NFP) change of +85K (prior +18K), a private payrolls change of +113K (prior +57K) and a steady 9.2% unemployment rate, according to Bloomberg consensus surveys. The range of NFP estimates in the survey is +20K to +150K; for private payrolls the range is +70Kto +150K. After June's disappointing jobs number, markets are under no illusion of a strong job creation environment in the US. Interim data suggest to us job growth remains anemic, so we think the risk is for another below-consensus report on the order of +30-60K in the NFP data. The private payrolls forecast closely matches the ADP employment reading of +114K (prior +145K), but we caution that ADP has a poor record of predicting the government's monthly jobs survey. Instead we will look for markets to respond to July private payrolls relative to the June reading of +57K. A July reading above June's may be interpreted as better than expected, especially in the current risk-off atmosphere heading into Friday, potentially prompting a bounce in risk assets/sentiment and spurring USD weakness. A July print that's worse than June's is likely to see the risk sell-off extend further, in our view, which may see the USD strengthen against all but the JPY. Finally, we would note that the July ADP reading represented a decline from the June ADP (which was also revised lower down from the original +157K), suggesting a non-trivial risk of another extremely disappointing US jobs report.
