Below-Consensus Nonfarm Payroll Views

Below-consensus nonfarm payrolls views include Barclays (+750k), NatWest (+700K), and BMO (+675K).

• Barclays sees private sector payrolls making up 700k of a 750k total gain in July. They see "difficulties in seasonally adjusting payrolls that likely overstated June's gains in employment, particularly in state and local education payrolls" leading to slightly less seasonally adjustment emp growth vs June. They expect the unemp rate to slip to 5.7% from 5.9% in June.
• NatWest sees a "high degree of uncertainty" in the July report, given re-opening effects and supply constraints being difficult to estimate. "continued fears of infections, supply-demand frictions, and over two million retirements since the onset of the virus could be holding down the labor rebound to some extent relative to some of the more optimistic estimates in the consensus survey." They see +550k private payrolls (consensus is +709k), with the unemp rate falling to 5.7%.
• BMO sees a 675k print reflecting supply constraints "preventing a stronger gain and even risking a weaker outcome", with the participation rate remaining stuck within the 61.4% to 61.7% range of the past year. This could see the unemp rate fall to 5.7% in July from 5.9%. While they expect a below-consensus headline payrolls result, BMO acknowledges that seasonal effects and a lift from education sector jobs could mean payrolls actually improve vs June.