NFP: 88k (and I don’t believe even that)

The Payroll numbers are out, and they are not particularly pretty:

88,000 new jobs were created in April, according to BLS. This is the weakest job gain since November ’04. Cumulative revisions for prior months were to the downside by 26,000.

As expected, losses were in Manufacturing (19k), Retail (26k) and Construction (11k). The  weakness in Construction has been very uted, implying that the full impact of the housing slow down has yet to be fully realized.

Biggest gains were had in Services (116k), Education and Health (53k), Gov’t (25k) Professional (24k) and Leisure/Hospitality (22k).    

Temporary help jobs fell for a 3rd month (January was flat) making 4 consecutive months of no gains. Temp help tends to lead employment gains, and this weakness can be read as a future forecastor of employment.

We don’t pay close attention to the Household survey, (the self reported number is very volatile) but the drop of -468k was an eyebrow raiser.


Birth Death Adjustment:  A whopping 317k B/D adjustment — that is the single largest "adjustment" on record for any single given month. And despite that giant add, the number was a very soft 88k.

To put this into some context, of those 317k new jobs hypothesized by BLS, 49k of those supposed jobs are in construction. Now what are the odds of that?

While Wall Street celebrates the upcoming recession, let me remind you that this economy requires about 150k new monthly jobs to merely keeep up with population growth.

April 2007

Table A.  Major indicators of labor market activity, seasonally adjusted
(Numbers in thousands)
                         |                 |                          |
                         |    Quarterly    |                          |
                         |     averages    |       Monthly data       |
                         |_________________|__________________________|  Mar.-
        Category         |        |        |                          |  Apr.
                         |  2006  |  2007  |            2007          | change
                         |        |        |        |        |        |
                         |   IV   |    I   |  Feb.  |  Mar.  |  Apr.  |
     HOUSEHOLD DATA      |                 Labor force status
                         |        |        |        |        |        |
Civilian labor force ....| 152,425| 152,912| 152,784| 152,979| 152,587|   -392
  Employment ............| 145,629| 146,044| 145,919| 146,254| 145,786|   -468
  Unemployment ..........|   6,797|   6,869|   6,865|   6,724|   6,801|     77
Not in labor force ......|  77,471|  77,927|  78,050|  78,055|  78,666|    611
                         |                 Unemployment rates
                         |        |        |        |        |        |
All workers .............|     4.5|     4.5|     4.5|     4.4|     4.5|    0.1
  Adult men .............|     3.9|     4.1|     4.1|     4.0|     4.0|     .0
  Adult women ...........|     3.9|     3.9|     3.8|     3.8|     3.8|     .0
  Teenagers .............|    15.1|    14.8|    14.9|    14.5|    15.3|     .8
  White .................|     3.9|     4.0|     4.0|     3.8|     3.9|     .1
  Black or African       |        |        |        |        |        |
    American ............|     8.5|     8.1|     7.9|     8.3|     8.2|    -.1
  Hispanic or Latino     |        |        |        |        |        |
    ethnicity ...........|     4.8|     5.4|     5.2|     5.1|     5.4|     .3
  ESTABLISHMENT DATA     |                     Employment
                         |        |        |        |        |        |
Nonfarm employment.......| 136,951|p137,448| 137,419|p137,596|p137,684|    p88
  Goods-producing (1)....|  22,539| p22,507|  22,465| p22,501| p22,473|   p-28
    Construction ........|   7,691|  p7,683|   7,641|  p7,691|  p7,680|   p-11
    Manufacturing .......|  14,147| p14,113|  14,113| p14,095| p14,076|   p-19
  Service-providing (1)..| 114,412|p114,941| 114,954|p115,095|p115,211|   p116
    Retail trade (2).....|  15,316| p15,373|  15,365| p15,397| p15,371|   p-26
    Professional and     |        |        |        |        |        |
      business services .|  17,727| p17,830|  17,840| p17,846| p17,870|    p24
    Education and health |        |        |        |        |        |
      services ..........|  18,019| p18,142|  18,138| p18,187| p18,240|    p53
    Leisure and          |        |        |        |        |        |
      hospitality .......|  13,318| p13,422|  13,425| p13,445| p13,467|    p22
    Government ..........|  22,107| p22,169|  22,174| p22,194| p22,219|    p25
                         |                  Hours of work (3)
                         |        |        |        |        |        |
Total private ...........|    33.9|   p33.8|    33.7|   p33.9|   p33.8|  p-0.1
  Manufacturing .........|    41.1|   p41.0|    40.9|   p41.2|   p41.1|   p-.1
    Overtime ............|     4.2|    p4.2|     4.1|    p4.3|    p4.2|   p-.1
                         |   Indexes of aggregate weekly hours (2002=100)(3)
                         |        |        |        |        |        |
Total private ...........|   106.5|  p106.8|   106.4|  p107.3|  p106.9|  p-0.4
                         |                     Earnings (3)
Average hourly earnings, |        |        |        |        |        |
  total private .........|  $17.00| p$17.16|  $17.16| p$17.21| p$17.25| p$0.04
Average weekly earnings, |        |        |        |        |        |
  total private .........|  575.73| p579.90|  578.29| p583.42| p583.05|  p-.37

   1 Includes other industries, not shown separately.
   2 Quarterly averages and the over-the-month change are calculated using
unrounded data.
   3 Data relate to private production and nonsupervisory workers.
  p = preliminary.


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What's been said:

Discussions found on the web:
  1. erik commented on May 4

    by the way cnbc reports you would think that we were all on oprah and about to get a new new grand prix!

    this american experiment is the biggest sale in the history of the world.

  2. lowsmoke commented on May 4

    I did not see the B/D adjustment in the press release. Where can I find that number?

    Also, I do not understand the reference to 150k jobs being necessary to keep up with population growth. Multiplying payroll employment (137.684 million) by monthly population growth (0.08 percent) gives 110k jobs.

  3. wyler commented on May 4

    With the ADP number tracking the BLS number so closely this month, does anyone know if
    (a) the ADP number is trying to predict the BLS private-sector number, or
    (b) the ADP number is trying to reflect actual private-sector payroll?

    If the latter, wouldn’t that tend to give the BLS number a bit more street cred?

  4. mhm commented on May 4

    The actual number doesn’t matter.
    Bellow consensus-> low inflation, rate cut (growth? who cares)
    Above consensus-> economy is booming (inflation? pfft)

    We are at the crossroads were Goldilocks meets Pollyanna.

  5. costa commented on May 4

    So when does bad news acutally affect the market or is it always poor economy means stock market goes up cause “rate cuts” could happen

  6. Terry commented on May 4

    CNBC commentary was spot on this morning…. If the NFP numbers comes in a high then it a non-even for the market; if it comes is low? oh, that’s a non-event as well.

  7. Philippe commented on May 4

    Wishful Thinkers’

    “Wall Street has been full of wishful thinkers thinking if only Bernanke would lower interest rates,” said Samuelson, a professor emeritus at the Massachusetts Institute of Technology, in an interview from Florida. “Well he’s not going to do it. He would lose his credibility if he did.”

  8. Sebastian commented on May 4

    “88,000 new jobs were created in April, according to BLS. This is the weakest job gain since November ’04…”

    Sorry, I’m not seeing how you got there. I’m looking at my spreadsheet and there were 86,000 new jobs created in October, 2006 and 37,000 in October, 2005. Did I miss some revisions or something?


  9. John commented on May 4


    All news is good news. All markets are bull markets.

    Didn’t you get Bernanke’s memo? It was printed on hundred-dollar bills…

  10. js commented on May 4

    M2 growth running well above economic growth. Coincidently, the pickup in money growth happened at the same time as B-52 Bernanke taking office. He is giving us all a gift by reflating the economy. He and the likes of Janet Yellen will go down as those who failed to learn from the lessons of history and eased policy in the face of rising inflationary pressures.

  11. js commented on May 4

    M2 growth running well above economic growth. Coincidently, the pickup in money growth happened at the same time as B-52 Bernanke taking office. He is giving us all a gift by reflating the economy. He and the likes of Janet Yellen will go down as those who failed to learn from the lessons of history and eased policy in the face of rising inflationary pressures.

  12. At These Levels commented on May 4

    S&P at New Recovery Highs

    New highs are new highs. As I said on Tuesday, the stock market is stronger than in 2000 and the economic numbers are weaker. You figure that one out. But Barry Ritholtz put it very neatly this morning: While Wall Street celebrates the coming recess

  13. patski commented on May 4

    Around Sacramento, all housing payroll growth was undocumented workers, now that the “bust” is here, there has been no job loss at all….

  14. erik commented on May 4

    i get pretty conflicted as a trader (albeit a flawed on) due to my skepticsm of this market. however, i put most of the strength of this tape in the corner of paulson and bernanke. where do you think we would be if john snow was still in the treasury?

    as for bernanke not heeding histories lessons, i think he knows the score and will choose the right path in the long run. so much of his academic work was studing the great depression. i find it hard to believe he would make the same mistakes.

  15. ferd mertz commented on May 4

    marc faber wrote an article in june 2003 reprising an italian economist’s review of weimar germany. stocks soared as the currency declined, perhaps similar to what is currently occurring in zimbabwe. can china and asian dollar bagholders take dollar collapse as the endgame to “reflation”?

  16. Michael Donnelly commented on May 4


    Yes you got bit by the revisions. October 2006 was first released at 92, then 79, then 86 and now its 109

    October 2005 was revised up to 107.

    BLS had a big nearly 1 million upward revision earlier in the year and both these months got goosed. I suspose the big upward revision is why the Birth / Deaths are a little more generous than usual, they don’t want to get caught again.

    That said, there is no way there is a positive B/D going on in Construction right now.


  17. Jdamon commented on May 4

    erik, I think you hit the nail on the head. Bernarke is making us all realize just how bad Greenspan really was. I mean, the way Greenie kept inflating the bubble stocks with low rates, only to pop them at the absolute worst moment in time (March 2000).

    For those who think this is a bubble, explain all the M&A activity. We have had some really large cap companies whos stock hasn’t moved in 6 – 7 years (MSFT, INTC, GE, J&J, CITI, etc.). The list goes on and on. Now, I hold a ton of Yahoo and it has been a dog. But, all the while they were piling up earnings, buying back stock, and generating huge amounts of cash flows. There stock has been stuck in never-land for a long time. It was ripe to be bought. Many large cap stocks are very cheap and that is what is fueling this M&A activity and moving the market higher. Liquidity folks. Cash has been stored for 7 years. It is now being put to work.

  18. Winston Munn commented on May 4

    I cannot fathom how we are not in economic contraction already, and perhaps down the road revisions will show this to be true.

    I think we are in the last 3-6 months of this bull’s life cycle, and how ugly it gets then is the square of how much resistance is created tying to avoid the inevitable.

  19. erik commented on May 4


    i would definitely argue it’s a bubble, just not the same bubble as the 2000 market. this time it’s a credit bubble and it will burst all the same.

    as for large caps being cheap and the reason for the m&a, are you serious?

    hey, i have this bridge for sale, any takers?

  20. Steve commented on May 4


    The ADP report is designed to predict the BLS number.

  21. Jdamon commented on May 4

    erik, explain how the companies I listed aren’t cheap on any valuation basis you want to use. Give it a try.

    Remember, it is better to be wrong and make money and right and not making money.

    I agree that we are having an economic contraction. I agree there were people who will be hurt by the housing markets contraction. I just don’t think housing and housing alone will wipe out the economy. Will it slow it down, yes, wipe it out altogether no.

    Explain to a layman what a “credit” bubble really is. Have we ever had one before and what did the market do. That is the analysis that would be relevent now.

  22. Incognitus commented on May 4

    Jdamon, a credit bubble is a “thing” where even an unemployed, incomeless, assetless person can borrow a couple of million dollars.

    And you had one, up until the 2nd half of 2006.

    And there’s no way it’s going to pop without consequences.

    Any doubts?

  23. sn commented on May 4

    js wrote: “…B-52 Bernanke…”

    Did you mean “Blackhawk Bernanke”?

  24. js commented on May 4

    He has been renamed B-52 Bernanke by Bill Fleckenstein

    This stock market PE looks cheap only compared to historically low bond yields. Of course, the Asian central banks have a lot to do with that (even Bernanke wrote a paper about this).

    Credit expansion has exploded after he stopped raising rates last year. How have the monetary conditions tightened except for lenders refusing loans to high risk sub prime type people. This Fed is far away from even keeping the money growth at a neutral level.

    It ended badly in Japan, it ended badly for stocks in 2000-2002 and it will end badly for those that took out all the debt in the near future. Problem is pinpointing how long the party keeps going.

  25. Steve Pilon commented on May 4

    In your entry of Tuesday, March 30, 2004 entitled “Resolving the Controversy between Payroll and Household Surveys” you discuss adjustments to the household survey to create results comparable to those of the establishment survey. Is a series incorporating those adjustments to more recent data available from the BLS?

  26. me commented on May 4

    88K = 1/3 of the number of monthly job average created per month for 8 years under Bill Clinton. How many times was the Clinton average exceeded by Bushco in any one month?

  27. JKR commented on May 4

    Kash at Street Light has a nice picture showing recent job growth by sector of the economy: Street Light

  28. Jdamon commented on May 4

    I am having some difficulty figuring all this out. The liberals (which I would argue a majority of the posters on Barry’s blog are), seem to think life under Clinton ’92 to ’00 was some sort of wonderful, great, growth economy that we should revert back to somehow. Yet, they then say how it was such a credit, asset bubble that there was no way it couldn’t burst into flames ’00 – ’03.

    So which was it – the best of times or the worst of times? Also, trying to compare now to then is just plain dumb. No comparison whatsoever. Back then companies with no earnings or losses were trading over $100 a share. Show me where that is going on now.

  29. Chimpy commented on May 4

    So when does bad news acutally affect the market or is it always poor economy means stock market goes up cause “rate cuts” could happen

    Posted by: costa
    If me and Bernanke have anything to do with it, hopefully about the time Hillary, Obama
    or Edwards takes office.

  30. PrahaPartizan commented on May 4

    The Fed conducted the same policy under Nixon/Ford, leaving Carter and Voelker to clean up the mess. Of course, that cost Carter reelection when combined with the Reagan/Bush illegality in conducting their own personal foreign policy. When did the Publicans acquire the patina of being the party of fiscal responsibility, because they’ve been anything but in my lifetime?

  31. Russ Winter commented on May 4

    A clue about “jobs” might come from just released data on remittances from the US to Mexico. Up only 0.6% year over year, way behind inflation, and abysmal on a per capita basis. Obviously the jobs are disappearing on the construction sites.

  32. Kevin Rooney commented on May 4

    I would agree that the majority on this blog are more liberal than conservative. I am too.
    Your question about how liberals can both praise the Clinton economy and condemn the bubble is a valid one. Here is my answer. About the Clinton era, I would say that there was distortion in the market (the bubble) at the end, but that the economy itself did fairly well. In the Bush era, there is even worse distortion in the market but it is on top of a fundamentally weaker economy. I would agree that the popping of the bubble left Bush some problems to deal with it, but would contend that his policies have made things worse, and worse in a structural way that matters more to more of the population (lack of good jobs) and does more harm to society and to conservative values too.
    I understand that you see things differently, but you asked.

  33. Geoff commented on May 4

    Im with ya, generally, but just to let you know, the number nowadays is actually closer to about 130k a month jobs needed to keep up with labor force growth. If you look at the trend in the labor force, the gains have been slowing. The 150k number was applicable a few years back, but that number has been bandied about a bit too much and no one seems to feel any need to update it.

    And as usual, the market stays irrational longer than we stay solvent if we bet against it, so for now, even this kind of awful report sends it higher.

    As I like to say, this can only end badly.

  34. Greg0658 commented on May 4

    I’m worried. And what to do?

    On the ’01GWBush install a number of big corporations shuffled to the bench and entered miaculpa pleas. The time had arrived for plea deals. Evidence would be suppressed.

    This market is enabling a transfer of wealth to __?__. Tax funded programs and market funded pensions would be immediately in trouble with a Nasdaq halving in the NYSE. We (USA) are totally reliant on oil to subsist. Our ground force military is hurting. 9/11 was an inside job by a coupdetat (because the days events had help).

    Is a Red Dawn movie plot possible? Who is the real life enemy? Na, I’m off my rocker, never happen, this would be totally destabilizing for the world. (But its to populated for its own good.) Na I’m goofie.

    ps – to post or not to post?
    Who needs another world war. Half full glass and filling. Everything works out. This is America.

    But if my nightmare is real, don’t tear up America, just be nice and take it in stride.

  35. Winston Munn commented on May 4

    The difference between no asset equites of the bubble and the current inflated value of real assets home bubble may go a long way into explaining why FCBs are reducing Treasury Bond holdings and increasing Toxic Waste GSE paper – when the big bang occurs, maybe they can salvage $0.20 on the dollar instead of seeing it all go up in smoke.

    Currently, FCBs hold 50% of all GSE paper with no sign of a slowdown in buying. Without the pressure applied to yields from vast amounts of re-cycled U.S. dollars, interest rates would soar.

    This is the heart and soul of the debt bubble, as it allows massive U.S. government deficit spending without the Fed having to capitalize the debt,sending the dollar value plummeting, interest rates soaring, and setting off hyperinflation as billions of new dollar bills are created from nothing.

    We are totally dependent on the kindness of strangers.

  36. A Dash of Insight commented on May 4

    Payroll Employment Report and the Birth/Death Model

    How should we interpret today’s employment report, showing a growth in non-farm payrolls of 88K, a bit less than expected? There is also an increase in the unemployment rate and a different picture of job growth from the survey of

  37. Winston Munn commented on May 4

    Russ Winter:


    Bernanke strikes me as very bright and seemingly truthful; however, I can’t help but think that even the smartest on earth, having gone to the best schools, and studied all the correct theories cannot help but be completely wrong if the original premise that founded their educational basis was wrong.

    It would be much like living in the 12th century, attending Cambridge, and earning a Ph.D. in Orbital Sciences – the fact that you know all the theories and can thus, via those theories, prove that the Earth is the center of the universe does not for a single instant prevent you from being totally full of shit.

    Should have gone to Austrian school where they understood the Earth revolves around the sun and money supply is the root of inflation.

  38. JKB commented on May 5

    Well this is really only smoke and mirrors if the supposition about IBM laying off 150k by the end of the year is true. And it seems to be true from the comments from reported IBMers. The reports of IBM contractors let go in April probably aren’t showing up in the NFP numbers either.

    It’s really starting to look like the scary market is building to climax, the market is exposed and reacting to every little sound with a hopeful “who’s there”. But he axe of reality has appeared out of the background is hovering. Just waiting for the market to turn around and notice it before it comes crashing down.

  39. Eclectic commented on May 5

    Go here:

    Only change selections to: “employed, seasonally adjusted, monthly.”

    You’ll get this:;jsessionid=f030da8e1dc1r$3C$06$

    Select graph (yellow) and change to 2006-2007. It’s an subroutine program and I can’t duplicate the results as a link.

    You’ll get a graph and tabulated data that depicts the overall downturn in Household Survey jobs by 458K for April. The graph seems to indicate a significant statistical break.

    Go back up to the data selection screen and keep everything the same, except select males, age 16-24. Do everything else the same and you’ll see that about half the 458K drop came from this sex and age group. Although women work in construction as well, that specific sex and age group is the prime rib of the limited skills common labor pool in residential and commercial construction.

    It probably helps explain Roubini’s observation that Fed money transfer remittances to Mexico and other countries in Latin America have dropped recently, even though the U.S. consumer has not yet run out of ready liquidity.

  40. me commented on May 5

    “seem to think life under Clinton ’92 to ’00 was some sort of wonderful, great, growth economy that we should revert back to somehow.”

    Uh yeah, I had a great job, good pay, great benefits. Oops, job went to India and this economy and job market suck.

    ” Yet, they then say how it was such a credit, asset bubble that there was no way it couldn’t burst into flames ’00 – ’03.”

    And the housing bubble now isn’t?????????

    In Atlanta/Georgia there are 19% less technology jobs now than in 2001. Furthermore, if the same proportion of people were considered in the labor market as were in 2000, the unemployment rate would be 6.2% today, much closer to reality. Do you believe people are rich and just “drop out” of the labor force?

    Plus gasoline was $.85 and now it is over $3.00.

  41. Eclectic commented on May 5

    Sorry, I made an error. Use the “both sexes” option and ages 16-24.

    My point was really that the unskilled common labor pool is first to get cut when there’s a downturn, and without a lot more selectors for education and training, there’s generally not as much skill in this age group.

    If a housing downturn is currently in the process of causing an economic downturn, then this age group will continue to suffer.

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