Big Upside Surprise for the July Jobs Report

U.S. nonfarm payrolls added 528,000 jobs in July, well above the consensus expectation of 250,000, and the biggest gain since February. Private payrolls posted a 471,000 gain in July versus consensus expectations of 230,000 and also the biggest gain since February (see first chart). Overall, the jobs report is a positive result.

Despite the strong results, a substantial preponderance of recent data suggest headwinds for the economy. An aggressive Fed tightening cycle, near-record-low consumer attitudes, rising initial claims for unemployment insurance, and a weakening housing market offset some of the positive effects of the strong July jobs report. Furthermore, ongoing disruptions to global supply chains add to the headwinds. Caution is still warranted.