The July jobs report was surprisingly strong beating analyst expectations.
- 117,000 new jobs were created in July. Only 85,000 were expected.
- The unemployment rate fell to 9.1% from 9.2%
- Average hourly earnings were up 0.4% vs. 0.2% last month
Despite these numbers Goldman’s top economist Jan Hatzius is more concerned about the unemployment rate rather than the number of new jobs created. He explains:
“During the post-WWII period, whenever the 3m average of the unrounded unemployment rate has increased by more than 35bps from a trough, the economy has either entered recession already, or will within 6 months. Currently, the three-month average rate is 9.07%, up from a recent trough of 8.90% in April. The unemployment rate would need to increase to 9.3% in July and stay there in August to trigger the 35bp threshold.”
SOURCE: Business Insider