Goldman's NFP Summary: "Hiring Remains Anemic"

On one hand you have Mark Zandi, whose ongoing attempts to brown-nose the entire administration and fill Romer's big shoes are getting outright pathetic. On the other, you have Goldman: "Report underscores weak tone of US labor market. Payrolls rise only 12k abstracting from discharge of temporary Census workers as job losses in state and local government offset most of a roughly in-line increase in private-sector payrolls; prior data revised down. Household survey confirms job losses, with jobless rate holding steady only because labor force continues to decline. Wage and workweek data recover slightly after weakness in June."

USA: Non-Farm Payroll Employment - Hiring Remains Anemic
   
Actual: -131,000 mom
Previous: -221,000 mom
Consensus: -65,000
Released: Friday, August 06, 2010 at 08:30 (New York time)

Hiring Remains Anemic

BOTTOM LINE: Report underscores weak tone of US labor market. Payrolls rise only 12k abstracting from discharge of temporary Census workers as job losses in state and local government offset most of a roughly in-line increase in private-sector payrolls; prior data revised down. Household survey confirms job losses, with jobless rate holding steady only because labor force continues to decline. Wage and workweek data recover slightly after weakness in June.

US-MAP: Nonfarm payrolls -10 (5, -2), with 1-point judgmental adjustment for revisions.
Unemployment rate 0 (5, 0), with a 1-point judgmental adjustment for labor force weakness.

KEY NUMBERS:

Nonfarm payrolls -131k in July vs. GS -75k, median forecast -65k.
Private payrolls +71k in July vs. GS +75k, median forecast +90k.
Unemployment rate unchanged at 9.5% in July vs. GS and median forecast 9.6%.
Average hourly earnings +0.2% in July (mom, +1.8% yoy) vs. GS and median forecast +0.1%.

MAIN POINTS:

1. Private-sector hiring remained anemic in July as employers added only 71k to their payrolls. Half of this (36k) was in manufacturing, where indicators are pointing to slower growth. Other cyclically sensitive sectors were weak, with temporary workers off 6k, construction down 11k, and retail up only 7k. State and local governments shed 48k jobs, presumably a reflecting of budget stresses as most of these jurisdictions began a new fiscal year in July. The discharge of 143k Census workers dragged overall payrolls down 131k.

2. Figures for prior months were revised down by a total of 92k for all payrolls, including the federal government. The revisions took 52k jobs away from the June increase in private jobs (though May was revised up modestly). Following these revisions, the trend in private hiring now features three consecutive months of increases under 75k, following much larger gains in February and March (averaging 200k). So the payroll data for Q2 support other indications of a significant slowing in US economic activity, except in manufacturing.

3. The parallel survey of households confirms the job losses reported in the headline payroll figures. Overall employment fell 159k in July and 315k on a payroll-adjusted basis (though this figure is quite noisy). The only reason the unemployment rate held steady was because 181k individuals left the labor force. The other measures of underemployment held relatively steady; for example, the U6 figure that includes marginally attached workers and those working part-time for economic reasons was flat at 16.5%.

4. Data on hourly earnings and workweeks were somewhat better - workweeks up 0.1 hour in both manufacturing (to 40.1 hours) and the broader economy (34.2), and wages rose 0.2%. But in both cases the data for June had been weak. The year-to-year trend in hourly earnings remains low, at 1.8%.