July 31- August 1 FOMC meeting and July employment report

There is little new information to expect from this week’s FOMC meeting and employment report. The Fed will opt for a status quo and only upgrade its economically constructive wording on the margin in order to validate rate hike expectations for September. Meanwhile, j ob creations may slightly slow down in July, but will remain close to the recent upbeat trend of 215,000 gains per month. A key question for the market and policy makers is how long labor market gains will persist with the number of job openings exceeding the number of available workers. Looking at the recent dynamics of the prime-age participation rate could be helpful. It has already improved meaningfully for women and has made a timid rebound for men. F urther improvement on that front would have the potential to make the solid trend in employment last longer. Making simple assumptions, we try to quantify this effect.