Negative NFP Expectations

Friday, April 04, 2008 | 06:58 AM

A few quick thoughts on this morning's NFP data:

Today's number has a consensus forecast of minus 70k 50k, but as we've stated ad nauseum, a single data point matters much less than the overall trend. And as anyone who looks at the numbers knows, the trend has been down.

Secondly, Vince Farrell mentioned on K&Co. Tuesday that the 2001 recession saw 200k job losses every month, arguing that since we've been nowhere near those numbers, ipso facto there is no recession.

The problem with this analysis is the difference in job creation between the 1994-2000 versus the 2003-08 cycle.

We regularly produced 300-400k monthly new jobs during the 1990s  boom. The current backwards, cheap money, real estate-driven cycle has produced the least amount of jobs of any recession-recovery period post WWII.


Chart courtesy of Spencer England's Economic Review (SEER)

Its no surprise that very weak job creation would not generate the sale sort of recessionary layoffs we saw after a much bigger jobs boom.

Lastly, the ADP data: The WSJ reports this morning that since November, ADP has been off by over 100K jobs per month. One possible explanation I have read elsewhere (the Liscio report?) is that of all of the non-government jobs, over 20% have come from government contractors and defense department outsourcing.

As we know, what the government does is not reflective real world economic conditions, so perhaps that is skewing the ADP data.


Bottom line: The trend is not friendly. Look for ongoing weakness, regardless of todays soon to be revised, B/D skewed  release.


UPDATE: April 4, 2008, 9:14am

March Payrolls fell a greater than expected 80k, 30k more than expected. The unemployment rate rose to 5.1% from 4.8%, the highest since post-Katrina Sept '05.

After falling a sharp 450k in Feb, the labor force rose by 410k. Net revisions were negative by 67k so job losses have averaged 77k over the past 3 months.

Net-net, the data speaks for itself and follows what is most rational on the part of business, tighten the belt when things are slow.




Job Market Hints Recession Has Started
WSJ, April 4, 2008; Page C1

Friday, April 04, 2008 | 06:58 AM | Permalink | Comments (43) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Negative NFP Expectations:


The weather man keeps telling me that it's sunny and in the mid-70s, but when I look out the window...

Who ya' gonna believe - ADP, or your own lying eyes?

Posted by: Marcus Aurelius | Apr 4, 2008 8:09:46 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™