Economic wrap and key risk events ahead - Westpac

Analysts at Westpac offered an economic wrap and event risks ahead.

Key Quotes:

"US July non-farm payrolls printed on the strong side of expectations at +255k (vs consensus 180k). Notable were upward revisions were worth +18k to the last two months, a +420k jobs gain in the household survey, and a stronger update for average hourly earnings of +0.3% to add to the impression of a very healthy report. With two strong back-to-back jobs gains the 3mth moving average is firming again, +190k from +153k last month, after sliding for much of this year. The unemployment rate was unchanged at 4.9%, defying expectations for a decline, but the labour force grew 407k and participation firmed +0.1ppt to 62.8%. No one industry stands out with gains fairly widespread: construction +16k (the strongest since March);  manufacturing +9k, making it two consecutive gains and confirming the worst for this sector is behind us; retail trade +15k; and business services +70k. Overall it’s hard to find any genuine faults in this report. This will keep alive 21 September Fed hike expectations (currently 26% probability), though they’re unlikely to run aggressively higher from here. Even with decent jobs data there will be doubts given the soft headline Q2 GDP and some Fed officials, especially those of the “Brainard school”, will continue to sound caution on the global front.

Also, BoJ and BoE easing are all keeping the USD elevated and doing some of the Fed’s work. Key event risk in the coming weeks includes July retail sales (12 Aug), Jul CPI (16 Aug), FOMC minutes (17 Aug), Chair Yellen at Jackson Hole (28 Aug), and Aug payrolls (2 Sep)."

Economic Event Risks Today

China’s trade balance for July is out, the median estimate being $47.30bn, both exports and imports expected to show smaller declines than in June but leaving the overall balance little changed.