Strong Payrolls Will Be Proof of US Recovery: Goldman’s O’Neill

A third straight month of strong payroll data will be "a huge event for U.S. and global markets" because it will show the U.S. economic recovery is real, Goldman Sachs Asset Management Chairman Jim O'Neill told CNBC Monday.

"After the two past positive surprises a third one would make a lot of people start to rethink some of their cautiousness about the U.S.," O'Neill said. "That raises the possibility of another material rally in the (S&P 500)."

"We’ve had a number of 2.5 percent since the turn of the year, still above consensus," he said regarding U.S. gross domestic product. "I see no reason to change that."

O'Neill said the current rally is "more broad and all-encompassing" than in 2011, coming at a time when there is more of a focus on natural gas and when the weakness of the dollar is making U.S. manufacturing more competitive again after losing ground to China.

There's also the possibility the "housing market is starting to stabilize. If you put the three together it's a big, big positive headwind," Goldman said.

His only concern is the rising price of oil.

"When oil prices rise persistently, they usually end up causing quite a bit of damage," he said. "That’s the biggest issue for me out there. Other than that, there's not as much to worry about" as most people would think.