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The Glass-Half-Full, Glass-Half-Broken 'Goldilocks' Payroll Preview

Tyler Durden's picture


Is bad, good still? Did Draghi's omnipotence obfuscate Bernanke's banality? Goldman's Jan Hatzius provides some color on what to expect for tomorrow's employment report. Forecasting a Goldilocks 'middling' print around 125k and flat 8.3% unemployment rate, he reminds us that this report is a very important one from both a monetary policy and political perspective. An upside surprise would raise more doubts about the Fed's determination to ease aggressively at next week's meeting and would strengthen President Obama's hand in the run-up to the November 6 election, and the converse is also true.


Goldman Sachs:Payroll Preview, Middling

We expect a middling August employment report, with a 125,000 gain in nonfarm payrolls and a flat 8.3% unemployment rate. This reflects conflicting signals from the indicators we use in our payroll models. On the positive side, initial jobless claims, the non-manufacturing ISM employment index, and the ADP report have all looked a bit better; in addition, strike effects should also be positive. On the negative side, job advertising, household employment perceptions, the manufacturing ISM, and broader growth measures such as our CAI all point to a weak report. Our forecast essentially splits the difference.

The July employment report was an upside surprise, at least as far as the establishment survey was concerned, as nonfarm payrolls grew 163,000 vs. an average of 73,000 in the prior three months. Will the August report, released at 8.30am on Friday, September 7, provide another reason for cheer?

There are certainly some reasons for optimism:

  1. Initial jobless claims have fallen, both between survey weeks (374,000 in August vs. 388,000 in July) and on a 4-week moving average basis.
  2. The nonmanufacturing ISM employment index improved significantly in August to a reading of 53.8, the strongest since April.
  3. A positive surprise in the ADP employment report, with a 201,000 gain, the strongest since March.
  4. A positive strike effect, as the net effect of changes in the number of striking workers will add 8,500 to the payroll gain vs. a 4,900 subtraction in July.

Despite these positive signals, on balance we view the July report as an outlier, and expect only a 125,000 gain in August (broadly in line with the consensus):

  1. The July payroll gain overstated that month's underlying strength. The headline number was good, but it benefited from a bounceback in essentially non-cyclical sectors such as education and health services. This will probably not be repeated. Moreover, the household survey was much less good, as household employment declined and the unemployment rate increased.
  2. Help-wanted advertising has been a disappointment recently. The Conference Board measure declined in both July and August, and the Monster.com index was also down in seasonally adjusted terms in July (August data not yet available).
  3. Household perceptions of job availability have stayed weak, as the differential between respondents who view jobs as "plentiful" versus "hard to get" in the Conference Board survey edged down in August to the weakest level since January.
  4. The ISM manufacturing index disappointed, with both the composite and the employment index falling to the weakest reading since 2009.
  5. Overall economic activity remains sluggish. While our Current Activity Indicator (CAI) picked up a bit to 1.4% in July, this is too slow to support healthy employment growth in the medium term. Moreover, the indicators released so far point to a weak CAI in August (we will release a preliminary version with Friday's employment numbers in hand).

This report is a very important one from both a monetary policy and political perspective. An upside surprise would raise more doubts about the Fed's determination to ease aggressively at next week's meeting and would strengthen President Obama's hand in the runup to the November 6 election, and the converse is also true.


Of course, we suspect no matter what the data point comes at (barring extreme outliers), it will be spun in a Goldilocks manner by left, right, long-only manager, and central planner banker alike - not too hot to totally remove QE hope, and not too cold as to crush Obama's hopes and dreams... (cue gratuitous Goldilocks costume)...

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Fri, 09/07/2012 - 00:42 | 2770607 The Shootist
The Shootist's picture

That goldilocks is just right.


Bad or middling is VERY good for Wall St.  ;)

Fri, 09/07/2012 - 00:45 | 2770620 Bizaro World
Bizaro World's picture

Best Costume Ever.....sorry what were we talking about? Oh yeah, markets are rigged, get out now, stack em high, or maybe today's +240 is sustainable...

Fri, 09/07/2012 - 00:52 | 2770638 Freddie
Freddie's picture

I'd hit it.  Sure beats the banner ads with Obama's wookie.  More Snorg Tess banner ads. 

Fri, 09/07/2012 - 01:02 | 2770645 Michael
Michael's picture

401k is just another casino gambling game of chance.

How much money did the majority of 401k investors individually earn on their investments, compared the amount of money they invested from their pay checks, since the inception of the 401k?



I approve of private sector unions, not public sector unions, because public sector unions are a conflict of interest with the public.

F.I.S.T (1978) Trailer



I give you a major component of the solution going cold turkey;

Dump every GSE owned Fanny and Freddy foreclosed property on the market all at once, offered to first time home buyers and people who don't own any property, with a Dutch style auction.  Limit one per customer.

It's that easy.

Thank me.

Fri, 09/07/2012 - 07:16 | 2770897 Sofa King Confused
Sofa King Confused's picture

I wish I was her teddy bear

Fri, 09/07/2012 - 09:10 | 2771254 Harlequin001
Harlequin001's picture


Fri, 09/07/2012 - 08:50 | 2771144 jekyll island
jekyll island's picture

401k holders actually did pretty good if they were in cash.  Market performance today is whoever sucked the least. 

Fri, 09/07/2012 - 00:58 | 2770651 MisterMousePotato
MisterMousePotato's picture

She has a very nice smile.

Fri, 09/07/2012 - 01:39 | 2770710 salvadordaly
salvadordaly's picture

yeah but did you get a look at that teddy bear?

Fri, 09/07/2012 - 02:33 | 2770755 Michael
Michael's picture

Got Guns & Ammo?

I should make this my signature line.

I just made this up.  It's like that Got Popcorn? (meme)

People should make bumper stickers out of this saying.

People should make T-Shirts with "Got Guns & Ammo? on the front and "Good." on the back.

I give this to you for free.  Have at it.

Fri, 09/07/2012 - 06:41 | 2770864 economics9698
economics9698's picture

No bra, should have poured ice cold water on those tits before the photo shoot.  Nothing like a perky cold tit to wake with.

Fri, 09/07/2012 - 07:12 | 2770894 ihedgemyhedges
ihedgemyhedges's picture

First the Dallas Cowboys cheerleader, now the all natural hot blonde holding a teddy bear........

I just wanna know why ZH keeps using pics of my ex-wives.......I think I need to let Rachel, Heather and Celeste know they may be next....

Fri, 09/07/2012 - 06:15 | 2770846 trebuchet
trebuchet's picture

are you kidding? I love those teddies!!!!

Fri, 09/07/2012 - 01:45 | 2770720 A Nanny Moose
A Nanny Moose's picture

You didn't hit that. Gummit hit it for you. Took em 5 tries to find the right hole.

Fri, 09/07/2012 - 01:43 | 2770718 A Nanny Moose
A Nanny Moose's picture

It's been a rough day here at ZH...Lauren Lyster videos, gold painted nymphs, and now goldilocks. Getting really hard to focus.

Fri, 09/07/2012 - 01:59 | 2770735 Bananamerican
Bananamerican's picture

quick! somebody post a Gina Rinehart pic for this poor chap!

Fri, 09/07/2012 - 02:20 | 2770752 A Nanny Moose
A Nanny Moose's picture

OK...I had that coming to me.

/gag reflex

Fri, 09/07/2012 - 02:29 | 2770757 Dr Benway
Dr Benway's picture

Noone deserves that, don't be so hard on yourself.



Fri, 09/07/2012 - 02:37 | 2770762 A Nanny Moose
A Nanny Moose's picture

Let's see....Goldi and her little fantasy inspiring dress, or reality....descisions.

Fri, 09/07/2012 - 02:47 | 2770767 Dr Benway
Dr Benway's picture

That's why the world truly is toast when we invent total reality immersion brain stimulation computer games. Fantasy will be more alluring than reality. Or maybe even remote stimulation of pleasure centra by an electrode-equipped hat will do the trick.

Fri, 09/07/2012 - 05:06 | 2770826 Colonel Klink
Colonel Klink's picture

We were talking about payroll, and I'd be happy to put her on it for a few hours!

Employment bitchez!  I mean employing bitchez!

Fri, 09/07/2012 - 00:45 | 2770617 dwayne elizando
dwayne elizando's picture

I think we could tread water a little while longer. Earlier in 2012 I thought we might crash in the second half of 2012 sometime. Lately though I've been thinking it'll be in 2013.

Fri, 09/07/2012 - 01:36 | 2770702 slaughterer
slaughterer's picture

NFP will be an unspinnable blowout.  

Fri, 09/07/2012 - 00:43 | 2770609 Yen Cross
Yen Cross's picture

 She is a cutie. ;-) I'll bet she is smarter than 99.99% of the population as well.

Fri, 09/07/2012 - 01:04 | 2770643 e-man
e-man's picture

I'm really happy too that Tyler chose her picture instead of a picture of Larry Kudlow.

So, bad is good and good will be terrible.  I imagine if they started burning down factories, the SPX would hit 10K.

Fri, 09/07/2012 - 02:50 | 2770774 Dr Benway
Dr Benway's picture

Bears like this bunny in a teddy with a teddy

Fri, 09/07/2012 - 00:44 | 2770613 s n p
s n p's picture

i just want to give thanks that goldilocks was included in such fine pixel detail so as to not disappoint!

Fri, 09/07/2012 - 00:51 | 2770636 valkir
valkir's picture

She does not need this bear.Enough wolfes around.

Fri, 09/07/2012 - 01:02 | 2770652 SafelyGraze
Fri, 09/07/2012 - 01:02 | 2770658 Yes_Questions
Yes_Questions's picture



Is that a muppet in her hand?

Fri, 09/07/2012 - 01:07 | 2770663 Tsunami Wave
Tsunami Wave's picture

Tyler... You put these pictures of hot womens up so we click and read your entries! Point proven though... If Goldman is semi-optimistic, and you are moreso pessimistic, and if Obama hasn't really made any reference to a continuing decline in unemployment in tonight's speech.. Then maybe tomorrow's NFP will show a slight "increase" in jobs (Though that will definitely include over-gratuitous fudging and other mis-measurements). The real question though is in the next FOMC minutes.. Will they announce more QE or extended twist? China "won't" do QE.. But maybe they'll debase their currency.. As a preemptive move or a consequence of Fed/ECB actions?

Fri, 09/07/2012 - 01:21 | 2770675 Mitch Comestein
Mitch Comestein's picture

  Listing Details

Source: Rural Messenger Classified Listed: Tuesday 28 August, 2012 Viewed: 43 times          

FREE lots & acres. 253-250-5042 cell

Just thought I would share this advertisement, posted above, with my fellow ZH'ers.  You would not have seen these ads. 7 years ago.  I have been following this seller's ads.  from when he wanted $5000-$10,000 per lot.  I think the taxes are killing him.  Oh, it is on a golf course.

Fri, 09/07/2012 - 01:54 | 2770727 CrashisOptimistic
CrashisOptimistic's picture

If it's zoned agricultural, I'm interested.  Is that craigslist?

Fri, 09/07/2012 - 03:29 | 2770796 LongOfTooth
LongOfTooth's picture

I found it in something called The Rural Messenger.  Looks like it's in Kansas.


Fri, 09/07/2012 - 01:22 | 2770684 lemonobrien
lemonobrien's picture

if i had a chick like that, i don't think i'd care about anything else; maybe this is why my wife is always mad at me :)

Fri, 09/07/2012 - 01:47 | 2770723 A Nanny Moose
A Nanny Moose's picture

Quite the conundrum isn't it?

Fri, 09/07/2012 - 01:34 | 2770696 Temporalist
Temporalist's picture

This porridge is juuuuust right:

More than 50 million Americans short of food

"More than 50 million Americans couldn't afford to buy food at some point in 2011, according to federal data."



And if you are interested in a poll on CNN.  Surprisingly the majority of CNN users are better off (or maybe not surprisingly that the poll says so):

Are you better off?


Fri, 09/07/2012 - 06:17 | 2770847 I am Jobe
I am Jobe's picture

Amerikans can stand to lose a few ponds. Fat bastards and Bitchezzz. WTF do these people want to eat, crap and more crap. Stuff their faces with crap. Look at Amerikan bitchezz look like hagged bitchezz by the time they are in their 30's that they have to apply make up with a paint brush. Fuck this

Fri, 09/07/2012 - 06:37 | 2770860 AnAnonymous
AnAnonymous's picture

It is not surprising.

Earth's resources are not enough to sustain 'american' middle class.

Some of the 'american' middle class has been pushed under the train. The rest is better off.

As possible, the pushed under the train no longer have an internet access, feel shameful to be middle class anymore etc so they wont be polled.

The rest, in the meantime, was able to reap off the benefits of that unloading of 'american' middle class...

It will keep going this way.

Fri, 09/07/2012 - 01:37 | 2770703 Bear
Bear's picture

The New - New Math

Good News  = Bad News  = No News  = Some News = Big News = Little News = QE


Fri, 09/07/2012 - 01:53 | 2770726 chump666
chump666's picture

central planning cartel inspired chaos due.  can't wait for that.

meantime...tequila and blonds.


Fri, 09/07/2012 - 04:26 | 2770800 reload
reload's picture

Uncaptured accademics in the UK claim unemployment is 50% higher than official figures indicate. I did not need an ecconomics proffesor to tell me that - just look around. The tragedy is the young, how Spain are going to avoid chaos is beyond me.


Fri, 09/07/2012 - 02:07 | 2770743 bk1037
bk1037's picture

OK the whole world knows the print tomorrow is large, but I'll play devil's advocate for a minute and question why. So what if it is 125,000 or 200,000, this is the same game that the political shisters have played with the jobs numbers for the past several years now, and more and more I am seeing this as a less significant moment for investors. But it's a big deal because everyone thinks it's a big deal, not that it really is as much any more. The market has run up in spite of some pretty volatile NFP numbers, and we all know how Uncle Sam is playing with these metrics for political purposes. NO one disagrees that we are not where we want to be, so why is this so damn important month after month after month.

It will be what it is, and it will continue to be in this range for the foreseeable future. Any one that relies on this single politically motivated metric to gauge the direction and momentum of the economy is pretty naive.

I do agree though it is the perception on what Bernanke and crew choose to do next which carry a lot more weight. But I do not agree with riskoff riskon so-called investing, when underlying facts about the economy do not change all that appreciably. Those that sell tomorrow only based on this news tomorrow probably should take a harder look at why they are in the market in the first place.


Fri, 09/07/2012 - 02:18 | 2770747 slewie the pi-rat
slewie the pi-rat's picture

anitaBryant, i presume?


more FED disinfo


what haz hazmat said about the FED in the last year that has been valid?  he knows less than tyler, and that ain't easy!  L0L!!!

al least we're not getting billD also, b/c you know if billD says something it simply must come to pass;  o my yes indeedy!  he is the chairsatan's boss and gives the FED their marching orders too...

just ask tyler!  L0L!!!

Fri, 09/07/2012 - 04:13 | 2770809 zhandax
zhandax's picture

slewie, you are showing your seasoning here....Anita Bryant lived down the street from the BeeGees when I moved to Miami Beach fresh out of college, and my degree has been old enough to drink long enough to get cirrhosis. 

Fri, 09/07/2012 - 02:38 | 2770763 q99x2
q99x2's picture

Boycott tomorrow.

Fri, 09/07/2012 - 02:56 | 2770777 Johnk
Johnk's picture

We need to get back to the stability, success and frugality of Bush/Cheney.

Thurston Howell/Alex P. Keaton 2012!

I'm fired up.

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