Daily Economic Outlook: 7th August, 2015

The US employment report is always seen as one of the key economic releases of the month. However, the FOMC's statement that it wants to see "some further improvement in the labor market" before raising interest rates means that both today's report and the next due in early September will receive even more attention than usual in the run up to the next FOMC meeting. FOMC member Lockhart, who is widely considered to be a 'centrist' , commented this week that he will probably vote for a rate rise in September unless the economic data deteriorates significantly.

This suggests that July  employment growth that is anywhere  close to the average for this year (208k), will leave a September rate rise as a distinct possibility, says Lloyds Bank. Other labour markets indicators for July have been mixed but on balance positive. The ADP employment estimate was weaker than expected at 185k, but the employment component of ISM non-manufacturing rose sharply and weekly  initial unemployment claims remain very low. 

Lloyds Bank argues, "We expect an employment gain of 230k, with the unemployment rate holding at 5.3%. There will also be a lot of interest in whether earnings growth picked up following June's tepid performance."

Elsewhere, this morning's industrial production data for 3 of the 4 largest euro area economies will provide evidence on whether economic growth in the region was continuing to improve toward the end of Q2. In the UK the trade deficit is expected to widen in June after posting a 17 year low in May.