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Payrolls Beat Forecast, Unemployment Falls

August 7th, 2009 Michael McDonough

Payrolls in the US fell by -247,000 in July, with the unemployment rate moving to 9.4% from 9.5%.  This compares to last month’s revised change of -443K, and a consensus forecast of -300K.  This number exceeds both the streets and my own expectations.  The drop in the unemployment rate was caused by a reported decrease of -422K to the workforce.  Manufacturing jobs fell -52K after falling -131k in June.  The service and goods producing sectors lost -119K and -138K, respectively.  Jobs in the construction industry diminished by -76K.  Education and health services added 17K new jobs compared to 37K in June.  Finally, government employment rose 7K, after falling by 40K a month prior.

This positive surprise in payrolls will likely lead to a rally in today’s trading, as the market continues to demonstrate well rounded improvements.  It is not unusual for the labor market to lag an overall economic recovery, so look for this data to improve even further over the coming months.  But, putting this number into perspective, we are still far from what would be considered healthy levels for the economy.  So far in 2009 the US has lost 3.6mn jobs, compared to 6.7mn since the recession began. But, we are on are way there.  This data may also help support the case that the current recession is at or near an end point.

Change in Payrolls



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