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U.S.: Can July’s Surge In Non-Farm Payrolls Last?

ByThe National Bank of Canada
Published 08/05/2012, 04:18 AM
Updated 05/14/2017, 06:45 AM

July’s employment reports provided mixed messages, with a stronger-than-expected non farm payrolls survey offsetting a largely disappointing household survey. The latter showed a 195K decline in employment (the first drop in three months), with full-time jobs plunging 228K, and causing the unemployment rate to move up one tick to 8.3%. As for the NFP, the 163K job gains were a result of strong manufacturing (with automakers opting to delay retooling-related shutdowns) and solid hiring in the services sector. However, it’s unclear if either of those sectors can maintain that pace of hiring.
Can July’s surge in non-farm payrolls last
As today’s Hot Charts show, the ISM’s manufacturing index of employment fell in July to the lowest since 2009. You just can’t delay retooling forever, and we could therefore see a deceleration in factory payrolls sooner rather than later. That shouldn’t surprise anybody given the sharp drop in orders and rising inventories. The outlook for services employment isn’t any better ― the ISM’s non-manufacturing index of employment indeed fell under 50 for the first time this year. Since the job gains of recent months came primarily from the services sector, a deceleration there could put a dent in the NFP.

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