Payrolls Miss Tempered by Upward Revisions

The 157,000 July payroll gain undershot the 190,000 expected (with “whisper” numbers well above 200,000), but 59,000 in upward revisions left a slightly higher-than-expected July payroll level on net, just as hours-worked fell 0.2% in July after a sharp June boost to 0.5% from 0.2% also left that metric in line with July expectations. There was the expected 0.3% hourly earnings rise with another 2.7% year-over-year increase.

The goods data revealed a solid 52,000 jobs gain with a 0.3% hours-worked increase, though service jobs rose just 118,000 which helped account for the disappointing headline. The goods sector was held back by a downside correction in the robust mining figures, where there was a 4,000 jobs drop with a 0.9% hours-worked decline.

There were 389,000 gains for civilian employment and 105,000 for the labor force that left a jobless rate drop to 3.87% and a sustained participation rate at an elevated 62.9%.

Analysts with Action Economics (AE) expect payroll gains to average 214,000 in 2018, following averages of 182,000 in 2017, 195,000 in 2016, 226,000 in 2015 and an expansion-high 250,000 in 2014. AE expects an average nonfarm payroll gain of 193,000 in Q3 after average gains of 230,000 (was 211,000) in Q2 and 218,000 in Q1.