The most important part of the report is the payrolls data. Total nonfarm payrolls rose by a tame 209,000 in July, versus the 233,000 expected. Some of the muted number may have been that the prior month was revised to 298,000 payrolls rather than the 288,000 previously reported.
Where there may be some disappointment is in the private sector payrolls. This was down at 198,000 rather than the 233,000 expected by Bloomberg. June’s preliminary reading of 262,000 was revised higher to 270,000.
Where there is good news is that the higher second-quarter employment cost index seen on Thursday did not translate into higher wage pressures in July. This came in flat at 0.0% in July, shy of the 0.2% expected by Bloomberg. Hourly earnings actually came in lower than all economists were projecting.
Friday’s payrolls and unemployment report should actually be a stabilizing report. We digested wage inflation fears and a hot 4.0% GDP report for the second quarter this week. This caused fear that stimulus may be ending and that rate hikes would come faster than expected. This would be considered a Goldilocks report for the market: positive, but not so positive that it changes the status of expectations on monetary policy.
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