Goldman On The NFP Number: "Good Not Great"

From Goldman's Jan Hatzius:

Good not Great

BOTTOM LINE: Employment report good but not great. Establishment survey data clearly better than expected, household survey still soft. (Note: Actual and previous values above corrected)


Nonfarm payrolls +117k in July, vs. GS +50k, median forecast +85k.
Unemployment rate 9.1% in July, vs. GS 9.2%, median forecast 9.2%.


1. Nonfarm payroll employment rose by 117k in July, more than expected. Employment growth over the prior two months was also revised up by a net 56k. Weakness in the report was concentrated in the public sector: government payrolls declined by 37k, and have fallen by about 190k over the last six months. Private sector payrolls increased by 154k during the month, up from an average gain of 90k over the previous two months. Manufacturing employment growth accelerated slightly due to an improvement in the vehicle sector; business services, retail and health care-related employment were also stronger. Temporary employment was unchanged after loses throughout Q2. Average hourly earnings increased by 0.4% (mom), much more than expected, and the average workweek was unchanged.

2. Figures from the household survey were less impressive. Although the unemployment rate fell by one tenth to 9.1%, this was driven by another decline in the labor force participation rate. The household survey's measure of employment fell by 38k, and the employment-to-population ratio declined to a cycle low of 58.1%.

3. Overall the payroll report was moderately encouraging relative to subdued expectations. However, it does not change the general message of weak growth evident in recent data. The preliminary July reading for our Current Activity Indicator (CAI) is 1.4%.