Deutsche Bank US Economics Notes: The Week Ahead — What You Need to Know
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Deutsche Bank's US economics weekly notes that after Fed Chair Warsh's forceful, economically optimistic and inflation-hawkish Jackson Hole speech, the highlight of the data calendar is Friday's August employment report. DB expects nonfarm payrolls to rebound to +65k (previously -23k), driven mainly by state and local education hiring, while private payrolls rise a more modest +25k (prior +30k). Average hourly earnings should bounce to +0.4% m/m from +0.1%, keeping nominal wage-tracker income growth around 4.0% y/y. The unemployment rate is expected to hold at 4.1%, with rounding risk to 4.2%; even a small uptick is unlikely to make the Fed reassess its labor market view, with initial claims' four-week average at multi-decade lows. Midweek, Tuesday's July JOLTS should extend the low-hiring/low-firing pattern; Wednesday's ADP is forecast at +47k (prior +44k); ISM manufacturing is seen at 55.8 and services at 54.3, with services employment still below 50. Governor Waller joins a Reuters Next inflation panel on Thursday—watch whether he echoes Warsh's hawkishness; Governor Barr and Cleveland Fed President Hammack also speak. DB reiterates that unless incoming data disappoint notably, a hike at the September 16 FOMC is the most likely policy outcome.
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