August 8, 2025 12:00 PM GMT August 8, 2025 US Economics Our quarterly US Consumer Chartbook, a one-stop shop for monitoring the US consumer, includes analysis and forecasts for three broad categories: Labor Market & Income, Consumption & Sentiment, and Credit & Balance Sheet. Each quarter, we spotlight a topical theme. In this edition, given the recent weakening in labor demand, we look at how labor income has held up and which cohorts have seen the most slowing. US Consumer Chartbook 3Q 2025: What You Need ...

Summary of Employment Report Preview Industry Overview - The report focuses on the **US labor market** and employment trends in **North America** as of July 2025 Key Points and Arguments 1. **Payroll Growth Forecast**: - Payrolls are expected to rise by **100,000** in July, with private payrolls contributing the same amount while government payrolls are projected to remain unchanged [1][6][8] 2. **Unemployment Rate**: - The U3 unemployment rate is forecasted to increase slightly to **4.2%**, remaining unchanged from a year earlier despite slower payroll growth [1][22][25] 3. **Labor Force Participation Rate (LFPR)**: - The LFPR is expected to hold steady at **62.3%**, but there are concerns that it may exert downward pressure on the unemployment rate due to declining participation, particularly among foreign-born individuals [1][23][29] 4. **Average Hourly Earnings**: - Average hourly earnings are anticipated to rise by **0.3% month-over-month**, with a year-over-year increase of **3.8%** [1][21][18] 5. **Sector-Specific Insights**: - The slowdown in private payrolls is notable, averaging **155,000** per month in 2023, **130,000** in 2024, and **107,000** in the first half of 2025, primarily driven by the services sector [7][8] - Manufacturing payrolls showed a slowdown in Q2 but did not experience a sudden stop in activity, while construction payrolls remained soft [7][8] 6. **Government Employment Trends**: - Federal government hiring is expected to slow, with a projected decline of **20,000** jobs in July, while state and local government payrolls are expected to see gains [8][9] 7. **Job Market Dynamics**: - New jobless claims are stable compared to the previous year, indicating limited layoffs, while job openings remain high, suggesting strong labor demand [9][14] 8. **Breakeven Payroll Pace**: - The breakeven pace for payrolls has decreased from **210,000** last year to **140,000** this year, with expectations that it could slow to **70,000** by year-end if deportations increase [24][27] Additional Important Insights - **Risks and Uncertainties**: - Upside risks include a higher job openings rate potentially leading to faster hiring, while downside risks stem from the ongoing slowdown in private payrolls and potential seasonal adjustments affecting payroll data [38][39] - **Future Federal Reserve Actions**: - The report suggests that slower payroll gains are unlikely to prompt immediate rate cuts by the Federal Reserve, as they remain focused on the overall labor market conditions [37] This summary encapsulates the essential insights from the employment report preview, highlighting the current state and anticipated trends in the US labor market.

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