US Markets

Rate hike unlikely after jobs data: Goldman's Hatzius

Goldman's Hatzius: Lot of slack in economy

The weaker-than-expected jobs data released Friday suggest the Federal Reserve is unlikely to increase interest rates any time soon, Goldman Sachs' top economist told CNBC.

Jan Hatzius expected nonfarm payrolls growth to hit 230,000 in July. However, the economy created 209,000 jobs, as the unemployment rate climbed to 6.2 percent.

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Jan Hatzius, chief economist of Goldman Sachs.
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Yet the jobs data, which offer a read on many aspects of the economy, were really a mixed bag, Hatzius said on "Squawk on the Street."

"At the margin, it was a little weaker across a number of things. You know, the payroll number is a little softer. The household survey was a little softer, although the increase in the unemployment rate was really more due to an increase in labor force participation, which is, of course, a good thing," Hatzius said. "But you also had a weaker earnings number. So overall, it was a little softer, but not to a worrisome degree."

The jobs data reflect a consistent, but unspectacular level of employment growth. Still, Hatzius said the soft job growth means the Fed is less likely to raise rates in the near term.

"To the extent that people have pulled forward their expectations for ... when the Fed might start to move into the first half of 2015, I think this is going to lead them to push it back again," he said.

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The Federal Reserve building
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Still, it's probably a good thing the Fed doesn't raise rates before the economy is ready to handle the increase.

"That said, the most important driver is really more the long end of the yield curve because that's what, you know, mortgage rates depend on and mortgage rates are probably the single most important transmission mechanism and at the longer end of the yield curve, rates are very low," he said. "So that's supportive and if you saw that change, yeah, that would make a difference, but it's not meaningful so far."

By CNBC's Drew Sandholm. Reuters contributed to this report.