US Non-Farm Payrolls August: US' non-farm payrolls probably dropped -225K in august compared with a reduction of -247K in the prior month. Although the decline remained rather sharp, the pace of contraction has slowed down. Over the week, the employment data we received were mildly positive. Both ISM manufacturing and non-manufacturing employment index improved while Chellenger reported reduction in layoff in August after rising in the previous month.
ADP employment dropped -298K in August. While this represented an improvement from a -371K reduction in July, it's worse than market expectation of -250K. Initial jobless claims for the last week in August fell -4K to 570K (consensus: 560K) with 4-week average rising +4K to 574K.
Unemployment rate should have risen to 9.5% in august following a surprising drop to 9.4% in July. We believe the downtick last month was driven by decrease in labor force and participation rate, rather than strong recovery in the job market. Volatility in participation rate usually makes unemployment rate difficult to forecast. However, as initial jobless claims remained hovering above 550K, this should have contributed to an uptick in the jobless rate
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