July US Non-Farm Payroll Report Hints at Downside Risks

The highly anticipated US non-farm payroll report for July is expected to be released tonight. Market consensus estimates an increase of around 80,000 jobs, but forecasts range widely from 40,000 to 157,000.

This volatility is partly due to the 'weak July' curse, a pattern where employment data in July has consistently fallen short of expectations over the past three years. According to Goldman Sachs, this trend has resulted in an average underperformance of 66,000 jobs compared to the three-month average and 35,000 below market consensus.

Meanwhile, some institutions are providing more bearish forecasts. Vanguard predicts only 18,000 new jobs, attributing the spring's employment data as being artificially inflated by weather, World Cup hiring, and local governments' early recruitment.

ADP's private sector employment data also shows a significant decline, with an increase of just 44,000, further exacerbating concerns about downside risks. The Federal Reserve, however, remains focused on inflation rather than employment, viewing the labor market as 'stable.'