With Goldman warning ahead of today's payrolls print that an "Inline print of 300k(ish) will keep pressure on this tape", moments ago the BLS reported that - as expected in the somewhat negative case - August payrolls indeed came 300k(ish)- or 315K specifically, just above the 298K consensus estimate, and down notably from last month's stellar 526K print (downward revised from 528K).

Nonfarm employment has risen by 5.8 million over the past 12 months, as the labor market continued to recover from the job losses of the pandemic-induced recession. This growth brings total nonfarm employment to 240,000 higher than its pre-pandemic level in February 2020.

Also of note is that the change in total nonfarm payroll employment for June was revised sharply lower by 105,000, from +398,000 to +293,000, and the change for July was revised down by 2,000, from +528,000 to +526,000. With these revisions, employment in June and July combined is 107,000 lower than previously reported.

In any case, with the headline rate coming in on top of Goldman's negative bogey, why are futures surging premarket? Two reasons:

First, the unemployment rate came in well above expected, printing at 3.7%, missing expectations of 3.5%, and above last month's 3.5% print as the number of unemployed persons increased by 344,000 to 6.0 million. Among the major worker groups, the unemployment rates for adult men (3.5 percent) and Hispanics (4.5 percent) rose in August. The jobless rates for adult women (3.3 percent), teenagers (10.4 percent), Whites (3.2 percent), Blacks (6.4 percent), and Asians (2.8 percent) showed little change over the month.

Another reason for the rise in the unemployment rate: the participation rate rose more than expected, printing 62.4% in August, above the 62.2% expected, and up from 62.1% last month.

The second reason for the spike in futures is because hourly earnings slowed again, and rose 0.3% in August, below the 0.4% expected and down notably from July's upward revised 0.5%. On an annual basis, average hourly earnings rose 5.2%, also below the 5.3% expected.

Some more details:

• In August, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $32.36. Over the past 12 months, average hourly earnings have increased by 5.2 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.4 percent, to $27.68.
• The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.5 hours in August. In manufacturing, the average workweek for all employees was little changed at 40.3 hours, and overtime held at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.1 hour to 33.9 hours.

In other words, solid headline payrolls number, but weakness in the unemployment rate and another much-needed tapering in wage growth.

Digging deeper, here is the breakdown of jobs by sector: In August, notable job gains occurred in professional and business services, health care, and retail trade.

• Professional and business services added 68,000 jobs in August. Within the industry, employment gains occurred in computer systems design and related services (+14,000), management and technical consulting services (+13,000), architectural and engineering services (+10,000), and scientific research and development services (+6,000), while legal services lost jobs (-9,000). Over the past 12 months, professional and business services have added 1.1 million jobs.
• Healthcare employment rose by 48,000, with job gains in offices of physicians (+15,000), hospitals (+15,000), and nursing and residential care facilities (+12,000). Health care has added 412,000 jobs over the year. Despite this growth, employment in health care is below its February 2020 level by 37,000, or 0.2 percent.
• Retail trade added 44,000 jobs in August and 422,000 jobs over the past 12 months. In August, employment increased in general merchandise stores (+15,000), food and beverage stores (+15,000), health and personal care stores (+10,000), and building material and garden supply stores (+7,000). Employment in furniture and home furnishings stores continued to trend down (-3,000).
• Manufacturing employment continued to trend up in August (+22,000), with gains concentrated in durable goods industries (+19,000). Manufacturing has added 461,000 jobs over the year.
• Employment in financial activities rose by 17,000 in August and by 200,000 over the year.
• Employment in wholesale trade increased by 15,000 in August, returning to its February 2020 level. This industry has added 197,000 jobs over the year.
• Mining employment rose by 6,000 in August, reflecting a gain in support activities for mining (+7,000). Over the year, mining has added 68,000 jobs.
• Employment in leisure and hospitality changed little in August (+31,000), following average monthly gains of 90,000 in the first 7 months of the year. Employment in leisure and hospitality is below its February 2020 level by 1.2 million, or 7.2 percent.
• In August, employment showed little change in other major industries, including construction, transportation and warehousing, information, other services, and government.

And visually:

Commenting on the report, Dennis DeBusschere, founder of 22V Research said that “this is positive for risk assets on the day as it reduces the odds that the Fed has to push rate hike expectations even higher. That being said, chasing the market is tough as demand appears to be strong still for the Fed. So they are unlikely to let financial conditions ease much. That limits the upside on this number. Keep in mind the number is still pretty strong.”

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