Due to the approaching US Independence Day holiday (and market closure), this non-farm report was rarely released on Thursday (July 3). ISM non-manufacturing data was not released before the report, which made the forward-looking indicators lose an important reference. The most worrying thing at present is that the ADP employment data fell to the lowest level since March 2023. What is more alarming is that the decline in ADP data has continued for several months, and it is less and less like a random fluctuation, but more like a trend deterioration.

In terms of seasonal patterns, Bank of Montreal pointed out that historically, 42% of the June unemployment rate data were higher than expected, 27% were lower than expected, and 31% were in line with expectations; the probability of overall non-farm employment data being higher/lower than expectations was 50% each, but the extent to which it was lower than expected was often slightly larger.

The market is currently pricing in a 30 basis point rate cut in September, but the probability of a rate cut in July is only 23%. Unless negative data appears, the probability of a rate cut in July is unlikely to increase significantly - even then, the Fed may view it as an isolated incident. The market has already sensed signs of weakness in the US economy, which is also an important reason why the US dollar has been under pressure recently.



Release time: 8:30 a.m. EST, July 3 (Thursday) 20:00 BJT, July 3

Market expectation: +110,000

Expected range: +50,000 to +160,000

May data: +139,000

Private sector forecast: +105,000 (previous value +140,000)

Median unemployment rate forecast: 4.3%

Last unrounded unemployment rate: 4.244%

Labor force participation rate last time: 62.4%

Last U6 headline unemployment rate: 7.8%

Average hourly wage annual growth forecast: +3.9% (same as previous value)

Average hourly wage monthly rate forecast: +0.3% (same as previous value)

Average workweek expected: 34.3 hours (same as last week)

The following data has been published this month:

ADP employment: -33,000 (the first decrease since March 2023, the previous value was +95,000, a new low since 2023)

ISM non-manufacturing employment breakdown: Not released

ISM manufacturing employment sub-index: 45.0 (three-month low, previous value 46.8)

Challenger layoffs: 48,000 (previous value: 93,800)

Philadelphia Fed Employment Index: -9.8 (lowest since 2020, previous value +16.5)

New York Fed Employment Index: +4.7 (previous value -5.1)

Initial jobless claims in the survey week: 246,000 (previous value: 226,000)

summary

The non-farm data is particularly critical this time. The unexpected contraction of ADP and the weakening of multiple employment indicators have sent warning signals. If the official non-farm data is also weak, it may strengthen the market's expectations of economic cooling, further suppress the US dollar, and prompt the Federal Reserve to turn to easing earlier. On the contrary, if the data is stable, it may temporarily alleviate recession concerns, but it will be difficult to reverse the market's bet on a medium- and long-term policy shift. Investors need to be wary of volatility risks after the data is released.