We expect headline payroll growth accelerated to 125k in July from 57k in June. We expect the unemployment rate increased slightly to 4.3% due to a rebound in LFPR. Last month, LFPR dropped by roughly 30bps to 61.55% - one factor behind the 11bps decline in the UR to an unrounded 4.19%. Our 4.3% forecast assumes LFPR rebounding to 61.7%. We expect average hourly earnings (AHE) growth slowed to 0.2% m-o-m from 0.3% in June due to -ve calendar effect. Although July labor market data have surprised to the downside in the past two years, we do not see strong evidence of residual seasonality in payrolls or the unemployment rate. Unlike recent years, there are few signs of broader labor market weakness heading into the report. Overall, we believe labor market remains resilient for now. Policymakers have remained sanguine about labor markets lately, with some even pointing to signs of strengthening. We expect stable labor markets will keep the Fed focused on inflation risks where we expect moderation from Sep after revised BEA methodology. We expect Fed to remain on hold for REMCY26.
