Commentary for Monday: The July employment report (Friday) headlines a busyweek of data that will provide a preliminary snapshot of economic activity inthe current quarter. We currently project a 200k gain on headline and privatenonfarm payrolls, which should be sufficient to lower the unemployment ratea tenth to 4.3%. Hours worked should remain steady at 34.5. Importantly, weproject a 0.3% gain in average hourly earnings (AHEs), which would have theeffect of lowering the year-over-year growth rate a tenth to 2.4%. However, inour view, the risk is that it rounds up and remains at 2.5%. Whatever may be thecase, as long as their is no material surprise in either direction, this month's AHEsare not likely to impact policymakers' intermediate-term inflation expectations allthat much, especially in light of the Q2employment cost index, which continuedto point to more of the same in terms of muted wage inflation.    There are several data releases ahead of Friday's employment report that could onthe margin impact analysts' projections, including our own. This morning beginswith the Chicago PMI (60.0forecast vs. 65.7previously), which we expect toslow somewhat after reaching its highest level in a little over three years lastmonth. One reason for this is that July is typically the month that many automanufacturers lower production in order to retool their factory equipment. Notethat the Chicago PMI has declined in July in four out of the last five years,the one exception being 2015when production schedules were not curtailedas much as usual due to disruptions earlier in the year. Given elevated autoinventory levels, this year's production pause may be a bit longer than in recentyears. A downshift in the Chicago PMI will likely impact analysts' expectationsfor Tuesday's manufacturing ISM (56.0vs. 57.8). While we expect a modestslowdown in the manufacturing sector near-term, the aforementioned sentimentgauges should remain firmly in expansion territory.

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