What to expect from August’s US jobs report - ING

"After a disappointing July report, we expect normal service to resume with a rebound in payrolls and a pick-up in pay, which should cement expectations of a September rate hike," ING analysts argue.

Key quotes

"Last year the economy created 182,000 jobs on average per month, but there's been a marked acceleration in 2018. The first seven months of the year have averaged 215,000 new jobs thanks to the strong economy, which expanded at an annualised 4.2% rate in 2Q18. Tax cuts are continuing to buoy sentiment and activity, and we think the economy is likely to expand a further 3-3.5% in the current quarter."

"However, July’s payrolls figure of “just” 157,000 was disappointing with the Bureau for Labour Statistics citing a loss of 31,800 jobs in the “sporting goods, hobby, book and music stores component”. This undoubtedly relates to the collapse of Toys R Us retail chain which led to 33,000 workers being laid off."

"Nonetheless, labour demand indicators remain robust with both the manufacturing and non-manufacturing ISM employment indices firmly in expansion territory. Meanwhile, the July National Federation of Independent Businesses survey showed the proportion of small businesses planning to hire workers remains close to all-time highs. As such, we expect to see a sharp rebound in payrolls of 210,000 versus the 193,000 Bloomberg consensus. The range of forecasts is 149,000-237,000."

"The economy looks set to grow by around 3% this year, and all of the major inflation readings are at or above the Federal Reserve’s 2% medium-term target. A strong jobs number and a pickup in wages would reinforce the message that monetary policy remains “accommodative” and that the Fed will continue with its strategy of “gradual” policy normalisation. To us, this suggests one 25bp rate hike per quarter with moves in September and December looking likely."