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Goldman On NPF: "Better Than Expected But Below Rate Needed To Keep Jobless Rate Stable"
Goldman's Jan Hatzius provides his summary of today's NFP number:
Better than Expected Despite Rise in Unemployment
BOTTOM LINE: Report clearly better than expected, especially in survey of establishments, though hiring remains below the rate needed to keep jobless rate stable. Unemployment rate rises as workers reenter labor force, though broadest measure of underemployment also increases. Wages rise more than expected.
KEY NUMBERS:
Nonfarm payrolls -54k in August vs. GS -125k, median forecast -105k.
Private payrolls +67k in August vs. GS flat, median forecast +40k.
Unemployment rate up 0.1pt to 9.6% in August vs. GS and median forecast 9.6%.
Average hourly earnings +0.3% in Aug (mom, +1.7% yoy) vs. GS and median forecast +0.1%.MAIN POINTS:
1. Firms in the private sector added 67,000 workers to their payrolls in August, modestly more than the median forecast and much firmer than our anticipation of no change. Census layoffs, at 114,000 were in line with our expectations, as was the additional 7,000 drop in permanent government jobs.2. The composition of the August job gains had offsetting surprises, as manufacturing payrolls fell 27,000 despite a high reading on the ISM's index of employment while construction jobs rose 19,000 in the face of multiple readings of weak activity in that sector. Temporary workers-a lead cyclical sector-posted a 17,000 increase in jobs. The lion's share of the gains, however, were in education and health (+45,000)-a mainstay of growth through most of this cycle.
3. Upward revisions to prior numbers added to upside surprises in this reports as 123,000 additional workers were added to the July level of total payrolls. However, only about half of this (66,000) was in the private sector. The magnitude of this revision, coupled with better-than-expected wage increases, was enough to prompt a 2-point judgmental adjustment to our US-MAP score for nonfarm payrolls.
4. The survey of households featured a rebound of 550,000 in the labor force, split almost equally between increases in employment (290,000) and unemployment (261,000). As a result, the unemployment rate conformed to expectations, rising to a "high" 9.6% (9.642%). The rebound in the labor force was slightly less than ½ the cumulative loss registered over just the past three months. This underscores the difficulty of bringing unemployment down; if more increases are in the offing, as seems likely on trend, the trend in net hiring-perhaps best measured by private payrolls-will not prevent further increase in unemployment. Over the past three months, private payrolls have risen just 78,000 on average. And, despite last month's large increase in the labor force, the broadest "U6" measure of underemployment also went up, to 16.7% from 16.5%.
5. Wage gains were another bright spot in the report, rising 0.3% overall-more than expected by virtually all economists. That said, the year-to-year trend remains subdued, at 1.7%, and actually edged down 0.1 point from July.
6. The index of hours worked was unchanged in August, as the nonfarm workweek held steady. It is tracking into the third quarter at just short of a 2% annual rate, implying little change in productivity if our 1.5% estimate for annualized real GDP growth is on the mark.
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Rosie to Lakshman on Lak's idea that it is normal to have a slow down in the year after a recovery
"you can have your own opininon but you can't have your own facts"
GS is begging for QE2. AND THEY'RE NOT GOING TO GET IT.
+1
Like a forest fire, we grow or we die.
BTW, the winners of this rally are the retail that will pull another 5-6 Billion out of equities this week at 4% gain over last week.
I posted this on the original data article but would love it if someone gave a hand with looking into the past numbers or offered their thoughts on the specific sector number's relevancy going forward.
ALL IS WELL IN PARADISE!!
KEEP TRUCKING BOYS!! YIHAAAAAAA!!!
No QE coming, no structural changes to economy as to fix why these jobs losses continue.
Bulls may be excited but they can't have bad is good (Leads to more QE) and good is good (economic recovery)... can't have it both ways boys
It's worked before.
Until it didn't
All is going according to plan in the double whammy economy: Payroll increases don't keep up with new unemployed, yet prices are firing on all cylinders.
Last year grads didn't even start to have a first job, so they can never be accounted for as unemployed.
And old people DY
Obama's plan seems to be working out fine!
If only we had a plan to make old people (+50) dy a bit faster...
Obamacare?
So this jobs number is driving a 2% gap down in longer Treasuries?
Seems more like a cover story to me.
That was pretty interesting.
http://www.finviz.com/futures_charts.ashx?t=ZB&p=m5
Typically, gigantic as fuck gaps in a nearly zero timeframe don't occur in non-manipulated markets.
We're reaching a new phase of the double whammy: prices are about to fly out of the gate but employment will be left to crumble slowly, along with house prices and real incomes.
10 am market gunning on deck.
if they say no stimulus they mean watch out for tons more stimulus.
Wage gains were realized after dropping company deductions.
My personal favorite deduction to decline: Short and long term Disability within company pay tree at 1/3 or 2/3 pay. They ask why dont I take it (ie Pay 60 dollars each period for both benefits) I tell them you get written up when sick and fired when really really sick. And the 500 or so employees paying 60 to company per pay period dont know better and the company profits.
I'll set that 60 aside in my savings thank you.
The college town is getting swollen with people of all ages filling classes trying to earn something for when times get better. They have not yet felt the pain of increasing debts and interest in addition to rising prices.
Can't understand how a relatively sophisticated money management firm like GS can pretend to have an intelligent discussion on the numbers w/o discussing the birth/death model. And it would be way too much to expect a discussion on statistical significance levels and whether this was anything but statistical noise.
Looks like Friday's 10 am plunge is going on. Don't be fooled, they'll ramp it up 20 handles after 11 am.
June Food stamps (SNAP) 41.3 million...says it all.
Not In Labor Force for August...increased by 801,000 (NSA). The size of labor force did increase, but I assume that is attributed to the remaining Census workers now back on civilian rolls.
DOW chart update:
http://stockmarket618.wordpress.com
If the birth death model added in 115,000 fictitious jobs, and the net total was -54,000 jobs, doesn't mean that the undoctored net job loss of my fellow Americans was -169,000 jobs. Is that really reason to rejoice? Did I misunderstand this?
I'm also curious for anyone who knows: Was the correction back to a lower stock market level due to the disastrous ISM figure, ECRI, or what? Thanks for the info!
This correction was Friday's bear trap, but obviously bears are not biting this time. You won't find reason in this market.
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