Payrolls surprise to upside

July Payrolls totaled 117k, 154k of which were private sector job adds. Both compare to 85k and 113k respectively. Also, the two prior months were revised higher by a net 56k. The unemployment rate ticked down .1% to 9.1% as while household employment fell by 38k after a huge drop of 445k in June, the labor force fell by 193k. The all in U6 rate was 16.1% vs 16.2% in June. Mfr’g added 24k jobs, 14k more than expected. Construction, retail, leisure, education/health also were areas that saw job gains. As expected state/local govt’s shed jobs and the financial sector lost jobs. Temp jobs were unchanged. Positively, avg hourly earnings rose .4% m/o/m and 2.3% y/o/y, the most since Oct ’09. Avg weekly hours were flat. Negatively, the avg duration of unemployment ticked up again and the participation rate fell to 63.9% from 64.1%, the lowest since 1984. Bottom line, in terms of the dramatically oversold market, it is exactly what was needed for those looking for a bounce and in terms of the actual economy, an average of 133k monthly jobs have been created in ’11 vs 78k in ’10 and while an obvious improvement, it’s still well below what’s needed to more quickly improve the damage done. Also, the key question is whether a decent jobs picture can cure global ills (likely not as we need big job gains, not mediocre ones) or will it fall victim to it over the rest of ’11, especially with what’s been seen in the global marketplace over the past two weeks.

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