US nonfarm payrolls data likely to show a healthy improvement in July

US nonfarm payrolls data has been volatile over the past month with two extreme reads - May to the low side and June to the high side. Analysts expect the July reading to come in closer to the true underlying trend near 175k.

May weakness seems to have exaggerated the cooling in hiring. Nonfarm payrolls surged by 287,000 in June, easing concerns that the labor market softening seen in April and May portended broad-based weakness in the economy. The June tally was boosted by the return of about 30,000 striking Verizon workers, but even after accounting for that special factor, payroll growth was still robust.

"We look for payrolls to have advanced by 140,000, while private payrolls may have climbed by 150,000. Meanwhile, the unemployment rate, which slid from 5.0 percent in April to 4.7 percent in May and rose to 4.9 percent in June, could have edged down slightly to 4.8 percent," said Scotiabank in a report.