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MS: AHE To Be Supported By Upward Calendar Bias

US OUTLOOK/OPINION
  • Morgan Stanley see nonfarm payrolls rising 300k in July (private 290k) after June's 372k as payrolls growth continues to decelerate as economic activity slows but remains strong.
  • Ahead, they see nonfarm payrolls growth slowing from the average monthly 457k in 1H22 to 220k in 2H22 and 108k in 2023.
  • Data since the last payroll report points to labor market slack beginning to ease from extremely tight levels, with JOLTS suggesting that excess labor demand continues to ease from its very high levels.
  • Further, the Conference Board labor market differential of jobs plentiful vs hard to get fell 2.1pts to 37.8%, the 4-week average of unemployment insurance claims increased 19k between reference weeks (possibly biased by by seasonal adjustments) and ISM manufacturing employment remains in contraction territory.
  • AHE seen re-accelerating to 0.4% M/M supported by an upward calendar bias, lowering the year-ago rate a tenth to 5.0% Y/Y whilst the average workweek holds steady at 34.5.
  • U/E rate seen steady at 3.6% as the participation rate increased a tenth to 62.3%.
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  • Morgan Stanley see nonfarm payrolls rising 300k in July (private 290k) after June's 372k as payrolls growth continues to decelerate as economic activity slows but remains strong.
  • Ahead, they see nonfarm payrolls growth slowing from the average monthly 457k in 1H22 to 220k in 2H22 and 108k in 2023.
  • Data since the last payroll report points to labor market slack beginning to ease from extremely tight levels, with JOLTS suggesting that excess labor demand continues to ease from its very high levels.
  • Further, the Conference Board labor market differential of jobs plentiful vs hard to get fell 2.1pts to 37.8%, the 4-week average of unemployment insurance claims increased 19k between reference weeks (possibly biased by by seasonal adjustments) and ISM manufacturing employment remains in contraction territory.
  • AHE seen re-accelerating to 0.4% M/M supported by an upward calendar bias, lowering the year-ago rate a tenth to 5.0% Y/Y whilst the average workweek holds steady at 34.5.
  • U/E rate seen steady at 3.6% as the participation rate increased a tenth to 62.3%.