Recent gains in US payrolls, including a stronger-than-expected June advance, probably exaggerate current employment growth, according to Goldman Sachs Group Inc.
US payrolls climbed 372,000 last month, the Labor Department’s establishment survey showed Friday, and averaged 375,000 from April through June. The June reading beat expectations and helped alleviate concerns of an imminent recession.
However, the department’s separate survey of households showed a 315,000 drop in June employment. And that source of data showed employment has fallen by about 116,000 on average over the past three months.
“While the household survey is much noisier than the establishment survey on a month-to-month basis, it picks up changes in net new firm creation in real time and therefore often outperforms the establishment survey at cyclical turning points, provided both measures are averaged over several months,” Goldman chief economist Jan Hatzius wrote in a note.
“This suggests that the still-robust nonfarm payroll prints of recent months probably overstate true job growth,” he said.
Hatzius also pointed to declines in job vacancies and quits, higher jobless claims, weaker employment indexes in industry surveys as well as scattered reports from companies about hiring freezes and slowdowns.
“There is no doubt that a labor market slowdown is underway,” Hatzius said.
This article was provided by Bloomberg News.