US Nonfarm Payrolls expected to rise by 80K in July

The US Bureau of Labor Statistics is scheduled to release the Nonfarm Payrolls figures for July on Friday at 12:30 GMT. Investors are scaling back their expectations for a Federal Reserve interest rate increase in September due to easing inflation concerns, which could affect how markets interpret the employment data and the US Dollar's value.

Analysts anticipate the Nonfarm Payrolls to increase by 80,000, following June's weaker-than-expected 57,000 figure. The unemployment rate is expected to remain unchanged at 4.2%, while annual wage inflation, measured by the Average Hourly Earnings, is projected to stay at 3.5%. Deutsche Bank economists predict a slightly stronger labor market, with employment growth of +65,000 in July, slightly above the +57,000 June reading.

They also foresee private payrolls rising by +65,000 after +49,000 previously. The forecasted average hourly earnings are expected to increase by 0.3% month-on-month, while average hours worked are projected to remain at 34.3 hours. BNY Mellon strategists highlight this week's July Nonfarm Payrolls report as a crucial data point for the Fed, with market expectations currently estimating around 80,000 new jobs.

They believe the 'breakeven rate' required to prevent the unemployment rate from rising is likely to be above 50,000 per month, given the slower labor force growth since the pandemic. The Nonfarm Payrolls report reveals the number of new jobs created in the US during the previous month in non-agricultural businesses and is released monthly by the US Bureau of Labor Statistics.

The changes in payrolls can be highly volatile, and the market's reaction depends on how traders assess the data contained in the BLS report.