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Written by Kathy Lien, Chief Strategist

US companies added 92k jobs to their payrolls in the month of July, far less than the market's 127k forecast. The June number was also revised down from 132k to 126k, leaving those hoping for a good number clearly dissatisfied.  Job growth fell below the 100k make it or break it mark to the weakest level since February 2007 and the third weakest level in 2 years. 

The unemployment rate also ticked higher to 4.6 percent, the highest since September 2006.  Although the one bright spot was that the weak dollar helped to boost manufacturing sector payrolls, this should push the Fed to seriously consider what the market has already decided for them, which is to lower rates at the end of the year.  There were plenty of signs that payrolls were going to be weak including the drop in the ADP employment survey, the increase in layoffs and the sharp fall in job ads.  August will only be a tougher month given the tightening of credit and the blowup in the subprime sector.  There is never just one cockroach in the closet, so we expect more hedge funds and home lenders to report major losses which cannot be positive for the labor market going forward. Today's news should be negative for both the US dollar and the US stock market. 

Details of Report:

Change in Non-Farm Payrolls:           92kA   127k Forecast,  126k Previous (rev)
Unemployment Rate:                       4.6%A   4.5% Forecast,  4.5% Previous
Change in Manufacturing Payrolls:    -2kA  -15k Forecast,  -13k Previous (rev)
Average Hourly Earnings:               0.3%A    0.3% Forecast,  0.4% Previous (rev)
Average Weekly Hours:                  33.8A    33.9 Forecast,  33.9 Previous