NFP = 94,000
source: BLS
>
BLS data has hit the tape, and its a bit of a yawner. As I write this, Dow and S&P are marginally in the green, Nasdaq and Russell 2000 marginally in the red -- but fading.
The survey was weak enough to allow the Fed to cut, but the 50 basis point slash that so many have been begging for is now likely off the table. According to the Fed Funds Futures,
rate cut odds for a 50 bps cut next week have fallen to 28%, vs. 50% as of
last week.
The Negatives: This was the fifth sub-100k NFP report over the past 6 months.
Yesterday, we extensively discussed the birth/death model. As we noted, the birth/death model contribution continues to rise as a total percentage of new hires. It was 51k jobs this month, versus 36k back in November '06. It also measured Construction hires as flat, and Financial hires rising 12k. Those two points confirm our view that the B/D model is continuing to overestimate hiring.
Revisions
in September and October figures brought job growth for those two
months to 214,000, or 48,000 fewer than the government had estimated a
month ago.
A little less than a third of the newly created jobs were Government hires (30k of 94k). This points out a general weakness of the report; It also shows how far off the ADP number were for private sector hiring (and as we noted previously, this was likely a seasonal adjustment issue on ADP’s part).
The Positives: Temp hiring rose for the second consecutive month. Temps are usually a good leading indicator of future hiring and economic activity.
~~~
Bottom line: The labor market continues to soften, but as the Household survey shows, it still has some life in it yet. The slow motion slow down continues . . .
>
Source:
Employment Situation Summary
Friday, December 7, 2007.
http://www.bls.gov/news.release/empsit.nr0.htm
PDF
Friday, December 07, 2007 | 10:15 AM | Permalink
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Barry, would you consider wages coming in higher than expected a positive or negative?
Posted by: Josh | Dec 7, 2007 10:58:00 AM
Most likely to be revised upwards in January as the pre-announcements of what we still call earnings are let out.
Ciao
MS
Posted by: michael schumacher | Dec 7, 2007 11:03:35 AM
The revisions are making my head spin too.
August was originally reported as -4,000, then revised to plus 89,000, then to 94,000,
September was 110,000, then revised to 96,000, then to 44,000.
October was 166,000, then revised to 170,000.
So revisions in this month report are October plus 4,000, September minus 52,000.
Posted by: Rex | Dec 7, 2007 11:54:27 AM
I would think temps are seasonal, or companies do not have faith in the future.
Posted by: Hal | Dec 7, 2007 12:36:47 PM
The local morning radio I listen to contracts with FOX for their top of the hour news. The 94,000 was reported as "great job growth" and "higher than expected".
Nevermind that it's negative job growth. Press On Regardless.
.
Posted by: VJ | Dec 7, 2007 12:47:48 PM
One of these days, we will have to grasp the full significance of less people needed to work for an equivalent (when not greater) output.
In the meantime, there is LOAD of public work on infrastructure that has been neglected for decades.
Instead of tax cuts here and there, perhaps we could renovate the House of America.
THAT would be quite a boost to the NFP.
To those who consider an absence of tax cuts as a raise in taxes, think about this: taxes is the price at which we collectively value America.
How much is America worth for you?
Posted by: Francois Theberge | Dec 7, 2007 12:58:52 PM
So does the BDM work on a per-industry basis or is it a universal calculation they apply?
I ask that because I would assume (hope) that government jobs would have pretty good statistical counting up to the month. Maybe agencies are created/destroyed at a rate they can't keep up with it that monthly but it is hard to see that B/D of government numbers is as appropriate as for private industry.
What I am driving at is this: if the government jobs are by their nature highly accurate then the picture is really bleak. If you add 30K government jobs to the 51K imaginary jobs then that only leave 13K measured jobs in the private sector.
Of course if BLS does not have good timely fed/state/local government job numbers then maybe some degree of BDM is valid for government jobs and the picture is a little better. So the question is how reliable are the monthly stats on government jobs?
Posted by: EricC | Dec 7, 2007 1:14:46 PM
Francois, you post some interesting thoughts (here and in the past). Thanks for sharing.
Posted by: wunsacon | Dec 7, 2007 1:23:11 PM
Eric BD is not seasonally adjusted so you can't compare it like that. The birth death model has accounted for 93% of private non-farm payrolls over the last 12 months on a NSA basis. This measure rose from 80% last month.
Posted by: Shuggie | Dec 7, 2007 1:25:04 PM
The post-revisions will knock more life out of it. Matter of fact, "wages" will be revised down as they have been in the past.
Time to abolish the NFP and other quarterly noise the government can't count accurately enough in that short of time.
Posted by: Cherry | Dec 7, 2007 2:04:48 PM
Thanks for explanation, Shuggie. That 93% number is astounding. When was the BDM first officially applied? Was it 2003?
The NYT copy of the AP story is comical. Headline: "Solid Gains in Jobs Reported"
Line one of the story: "Employers added a modest 94,000 jobs..." No mention of the -48K revisions of the previous two months, or discussion of employment/population ratio, or the number of jobs needed for treading water.
Assuming we need 140k+ jobs per month to keep up with population, then consider this analogy. Imagine a lake covered with ice. If that ice was rated as 2/3 the thickness needed to support your weight, would you call it solid? Sure in chemistry/physics terms it is "solid," but...
Posted by: EricC | Dec 7, 2007 2:15:28 PM
Remember, another reason Big Ben has room to cut rates id because Wage inflation is declining. The Fed and the "government" are two different beasts. They know what the "real" numbers are and what they will eventually be released as by the government.
The 2nd quarter wage growth slump revision just further proved what the Fed already knew.
Reading the Fed is a better economic indictor than the governments flawed numbers.
I don't see the event horizen moment quite yet, hope for avoiding recession is probably still a percentage chance, but it is getting closer and closer to 0% chance=event horizen moment.
Posted by: Cherry | Dec 7, 2007 2:31:18 PM
data (even with the revisions we know are going to come and the birth/death anomaly)are still enough to be used/cited as reason to kick start certain spec markets e.g Au sell off,Cu et al reversing trend (temporarily)which flows into share market segments
the wary stay away
the opportunists manipulate
and the cannon fodder usually get burnt
rgds pcm
Posted by: peter from oz | Dec 7, 2007 2:47:31 PM
In today's data, just 49.8% of industries added workers in November, the smallest percentage since September 2003, according to data contained in today's jobs report.
Posted by: Boockman | Dec 7, 2007 3:01:23 PM
Huza!!! Stop your bitching and pandering, you look good.. but certainly not as good as Lindsey.
And.... The comments about what a Whiny bunch of bitches, Wallstreet/McBuisness TV are. Not one word about moral hazard with Wall-street Bailouts, Corporate Welfare, but some home owners get a "Rate Cut" of their own, and they are up in arms.
It was nice when Herbie G, almost stood on a table at CNBC and said "Corrections are Good."
I still say we put Citi, Deutsche, Morgan Stanly, CFC, into receivership and makes them recall all their derivatives.
I'm Twice the Free Market Capitalist Kudlow is... They need to change that show. "Free market capitalism, best path to prosperity.. Unless the market is going down.. Then it's all "Help me Daddy, my dress got caught in this mean market machine."
Adam Smith said "invisible Hand", not handouts from the fed, The economy is fine, till jobs are negative, The fed needs to be an inflation hawk.
oh wait.. maybe even the fed knows the numbers are bullshit, but that is even more reason for the fed to show some tough love and get the government to show some reality based economic statistics.
Posted by: Eric Davis | Dec 7, 2007 3:15:00 PM
Notice y'all that the late afternoon headlines on the Employment report are "tepid" job growth; at least in some MSM circles. This is an important SEE change since we've had numbers that far below the 150K that got embraced as encouraging. Mindshift underway here folks and important for understanding the sentiment outlook.
Posted by: dblwyo | Dec 7, 2007 4:52:24 PM
Fair comments all. Interesting that the B/D adjustments got a fair hearing in the MSM (CNBC at least) as did the Household vs Establishment differences. Amazing progress on revising mindsets and substituting new memes largely from the blogosphere. Which also helps explain why a couple or three months ago 94K jobs would've gotten widespread positives and got shrugged off. In fact think about it - GDP #'s couldn't have been any better ostensibly and employment was "o.k.".
If you'd like to see the YOY charts plus an Establishment vs Houshold comp try this:
More On Payroll: http://tinyurl.com/2rno9w
Much longer baseline than Justin Lahart's which show sustained divergence in some periods but basically they move together though both are both slowing and increasing the slowing the Household survey is indeed declining faster.
Also a much longer baseline look at aggregate job creation and macro-consequences of never having gotten solid organic growth. FWIW
Posted by: dblwyo | Dec 8, 2007 3:08:58 PM
Thanks for all the information. Although not everything is what we expected.
Posted by: John Moore | Dec 13, 2007 10:08:59 AM
