Flash: A decent NFP report - BAML

FXstreet.com (London) - David Woo and Shyam Rajan, strategist at BofA Merill Lynch said, is his view, the strong reaction of the rates and FX markets to a slightly weak headline number was unjustified.

Key Quotes:

“Diving beneath the headlines reveals more than one bright spot in this payroll report”.

“Construction jobs caused nearly a 14,000 swing in the headline number (from +8,000 in June to -6,000 in July)”.

“This is likely a one-off and our economists believe a conservative estimate for this sector is about +20,000 jobs/month going forward, given the momentum of the housing market”.

“In contrast to the June payroll report that was flattered by a jump in part-time and leisure service hiring (possibly linked to preparations for the Affordable Care Act), the July headline number held up quite well despite a drop in these sectors”.

“Part time workers for economic reasons rose only 19,000 in July vs 322,000 in June. Further, the retail sector added 47,000 jobs, indicating consumer spending remains strong”.