Reviewing the NFP Data
Courtesy CNBC
Fist off, the numbers: BLS reported Payroll employment dropped 20,000, far below the consensus estimates. Unemployment fell to 5.0%.
If you believe the headline numbers are an accurate reflection of the current US employment situation, then you can stop reading this, and head over to this article. Everyone else should feel free to keep reading.
Let's consider a few items:
• Private payrolls have fallen for five straight months. Weakness in the goods-producing sector is intensifying;
• Employees working part time jobs is +306k this month to 5.2 million. This increase is either because a) Hours have been curtailed; or B)They cannot find full-time employment. Note that if your hours get cut back, you do not show up in the Unemployment Rate or any layoff data.
• As noted earlier, the Birth/Death model was a major distortion. (in several months, we will get the revisions). Lets look at how the B/D has changed from April 2007 (+262) to April 2008 (+267):
+45k construction jobs v 37k April 2007
+8k jobs were added in financial activities versus 1k last April.
+72k in professional/business services versus 48k last April.
+83k in leisure/hospitality (95k last April).
I am certain that some country on some planet in our galaxy is adding more jobs in construction and finance versus one year ago, but it ain't the USA on planet Earth, that's for sure.
Remember, the B/D adjustment is not a one for one addition, it goes into the total employment measure (not just the increase) then gets seasonally adjusted.
•
The primary payroll improvement was in the service-providing sector.
Ian Shepherdson of High Frequency Economics suggests this is noise, as
the the seasonal factor
was 81,000 bigger than in April 07. (Easter seasonal problems?)
• The overall trend is increasing weakness in job creation.
>
UPDATE: May 2, 2008 10:38
A brief explanation of the B/D adjustment: The changes in the Birth Death model were designed to capture new job creation that BLS was missing at the early stages of a recovery. However, the improvements in accuracy at that part of the cycle seem to be wildly offset by a decrease in accuracy in the latter parts of the cycle -- i.e., early turns in employment pre-recession.
>
Sources:
Employment Situation Summary
THE EMPLOYMENT SITUATION: APRIL 2008
http://www.bls.gov/news.release/empsit.nr0.htm
Download April_2008.pdf
CES Net Birth/Death Model
http://www.bls.gov/web/cesbd.htm
Friday, May 02, 2008 | 09:58 AM | Permalink
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Comments
April Fools Joke ?????????
Posted by: grumpyoldvet | May 2, 2008 10:36:05 AM
It looks like the market finally figured it out.
Big dumping now going on.
Posted by: John Borchers | May 2, 2008 10:38:18 AM
The number is a bald-faced lie.There is no way the birth-death can add more construction & finance jobs than April 2007.The employment number goes to the White House before release, according to Phil Grande radio(philsgang.com)
Posted by: gordon | May 2, 2008 10:38:29 AM
Look at V's bid die.
Posted by: John Borchers | May 2, 2008 10:39:10 AM
"+72k in professional/business services versus 48k last April."
Is there some formulaic reason for things like this or are we talking flat out dishonesty by lying liars in the US government?
Posted by: wally | May 2, 2008 10:39:53 AM
"If you believe the headline numbers are an accurate reflection of the current US employment situation, then you can stop reading this, and head over to this article. Everyone else should feel free to keep reading."...man that was funny when I jumped to the article just to see what it was and ...there he was smiling at me..lololol
Posted by: brasil | May 2, 2008 10:41:30 AM
But the headline font announcing this miracle at the top center of the NYT and WP is *really* big so it must be true.
Posted by: Espumoso | May 2, 2008 10:44:27 AM
Excerpt from AP story:
On the jobs front, construction companies slashed 61,000 positions in April. Manufacturers cut 46,000 and retailers got rid of 27,000. Those losses were eclipsed by job gains in education and health care, professional and business services, the government and elsewhere.
Question: This says good jobs were cut and replaced by underclass jobs. It says construction was cut by 61,000, not increased by 45,000. Where do you see construction jobs increasing by 45,000?
Oil is going back up and gold is inching up. Silver, copper, gas, natural gas: all up. The basic cost of living is not coming back down soon. This is what's killing the economy, not housing or finance. Fix this and everything improved over time. Otherwise, we're looking at a complete shift of the standard of living in the wrong direction. Insidiously, it will be in the form of a slow motion rockslide.
Layoffs close to home are going on.
I'm not buying into this market, although the lizard brain in me really wants to. (Buy NOW! before it's all gone!) I'll catch it on the flip side when earning announcements are over and people have time to think.
Posted by: cinefoz | May 2, 2008 10:50:08 AM
And the MarketWatch headline this AM (super-sized crackhead font, mind you)...
"Take these jobs and love it"
Stronger-than-expexted payroll numbers keep the bulls in business...
Posted by: Boom2Bust.com | May 2, 2008 10:53:34 AM
John- according to Phil Grande radio(philsgang.com),the birth death phantom jobs are created by the (corrupt) BLS looking at each Federal district's (Fed Reserve Banks, I believe -7) FILINGS FOR NEW CORPORATIONS. They arbitrarily assign a number of employees these "new businesses" (many are bogus S-Corps set up as tax-dodges)MIGHT CREATE! (birth)
Bingo!
Also, prison inmates are counted as manufacturing jobs, according to Phil.
Posted by: gordon | May 2, 2008 10:53:56 AM
Cinefoz,
In answer to your question, note that the +45M construction figure is the B/D model adjustment. In other words, unadjusted construction job loss was -106M (-61M as reported - 45M adjustment).
Posted by: Estragon | May 2, 2008 10:59:41 AM
"Disreality'
The market trades on "disreality" these days.
1. Garbage loans are turned in to gold (treasuries),
2.the market ignores long term systemic issues (more loan resets and Alt-A looming crisis, budget deficits). In fact, most commentators talk "long term" in terms of 6 months.
3.Slowing "rates of decline" are good news. Nice spin.
4. Birth Death Adjustment: BWAAAAA!
Disreality-I made up a word, but I think it applies.
Posted by: Rich Shinnick | May 2, 2008 11:01:25 AM
Three consecutive months of Industrial survey of manufacturing (ISM below 50)is more eloquent than the hoovering of employment survey (It used to be pooled by students and once gathered dispatched for meditation)
Posted by: Philippe | May 2, 2008 11:03:29 AM
Barry - what was the U6 rate?
Posted by: real unemployed | May 2, 2008 11:03:52 AM
If one ignores the B/D injection, NFP was negative 287,000. But, so what. This market refuses go down.
Posted by: Johnnyvee | May 2, 2008 11:04:26 AM
Espumoso: the BLS created 45K PHANTOM construction jobs, click on Barry's BIRTH/death charts.
As for education jobs, ARE YOU NUTS?? Here in California, they are slashing classes(art, music, athletics, etc) and passing out pink slips right and left! You can't find a job teaching here if your life depends on it, unless you specialize in under-developed children or some preschool pro- bono work.
Posted by: gordon | May 2, 2008 11:04:36 AM
Estragon,
Thank you for your reply.
Regarding the B/D adjustment ... WHAT KIND OF CRAP IS THIS? It looks like some kind of pointy headed dumbass shit. Why can't a number just be a number without being spinned by something inscrutable and probably nonsensical?
Posted by: cinefoz | May 2, 2008 11:05:02 AM
yes, data reeks of wikiality. but it's a tough time to be short.
ask doug kass with his all-in short from a couple of days ago.
pick the low-hanging fruit while the getting is good.
looks like the global olympics rally has already come and will go soon?
Posted by: ron jeremy | May 2, 2008 11:14:10 AM
I know the survey response rate doesn't get any love, but I'll try again.
The Birth Death model adds a phantom 267,000 jobs, the survey response rate means the BLS adds a phantom 45 MILLION jobs. (32.7% of surveys are not available)
It is very much to the BLS's credit that when the remaining 32% of surveys trickle in over the next 3 months, that revisions aren't insanely large.
Posted by: Michael Donnelly | May 2, 2008 11:16:03 AM
This is what is know as RDE - Rectal Data Extraction.
Posted by: dwkunkel | May 2, 2008 11:17:16 AM
I can smell optimism in the air...Larry Kudlow on CNBC looks like he's ready to start break dancing like it's 1984. We're setting up for a nice turn later this month. The key ingredient was a good dose of optimism and happiness amongst investors.
AT
Posted by: Andy Tabbo | May 2, 2008 11:18:08 AM
If one goes back to the jobs/s&p chart awhile back there was a couple up bars after the first jobs dip before the deluge. I for one am getting sick of the numerical 'El Cid' game going on by 'our' US gov't. ~m
Posted by: Evan Myquest | May 2, 2008 11:19:44 AM
Bears,
You are so pathetic. I did not see you screaming murder in January when the Birth/Death model subtracted -378K jobs.
~~~
BR: That's becuase you didn't look: Here's what i wrote: "January's Birth/Death adjustment has been traditionally negative, as it reflects the layoffs and closings of holiday seasonal business. In January 2007, it was -175k. In January 2008, it leapt to -378k."
http://bigpicture.typepad.com/comments/2008/02/us-payrolls-fug.html
Posted by: Gérard | May 2, 2008 11:30:32 AM
Great post Barry. The things is, your objective critique of the data is an analysis, once again not undertaken by anyone the MSM where a greater audience is reached. Why not? This abdication of critical journalism by the MSM is in itself one of the largest stories over the past year. Complicit in deceit,... I choose not to want to believe that, yet more and more, unless I just conclude they're blind, naive and lazy, I have too. With very few exceptions why the free pass on objectivity and critical analysis by those the MSM, simply letting this spin go unchallenged?
Posted by: stuart | May 2, 2008 11:33:31 AM
That wasn't crazy for a January
Jan 2004 -321,000
Jan 2003 -393,000
Posted by: Michael Donnelly | May 2, 2008 11:37:47 AM
