1. Nonfarm payrolls unexpectedly contracted in July, as a steep drop in government employment offset modest gains in private jobs.

– Data for the previous two months were revised down.

– The three-month average for job growth slowed sharply.

– In the private sector, job growth was strongest in health care and construction, and weakest in leisure and hospitality and financial activities.

– Excluding leisure, hospitality, and health care, private payrolls posted modest gains.

– Goldman’s estimate of underlying trend job growth fell to just 5,000, well below the break-even rate.

• The unemployment rate dipped by 10 bps to 4.1%, below consensus, …

… reflecting an 87,000 decline in household employment …

… but a much larger 264,000 decline in the size of the labor force.

– Here is a rough attribution of how the unemployment rate has changed.

– The civilian labor force participation rate ticked down, although the participation rate for the prime-age cohort rebounded.

– The employment-to-population ratio rebounded sharply for those without a high school diploma.

– The underemployment rate (U6) held steady.

• Wage growth decelerated.

• This chart shows the intraday market reaction to the jobs report.

– The yield curve bull steepened.

– The dollar fell to its lowest level since May.

2. According to the New York Fed’s Survey of Consumer Expectations, inflation expectations were broadly stable, edging down slightly at shorter horizons.

• Expectations for a higher unemployment rate ticked up.

– However, perceived job security was little changed and confidence in finding new employment improved.

• The perceived likelihood of missing a minimum debt payment rose.

3. Used vehicle values dropped.

4. Chair Warsh’s FOMC press conferences are unusually dominated by process words over economic substance relative to prior Fed chairs, reinforcing concerns about his opaque communication.

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1. Employment growth comfortably beat consensus, supported by solid gains across both full-time and part-time positions.

• The unemployment rate fell to 6.4%, …