NFP +166k

I have to jump, but here’s the official release:

"Nonfarm payroll employment rose by 166,000 in October, and the unemployment rate was unchanged at 4.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Job gains occurred in professional and business services, health care, and leisure and hospitality.  Manufacturing employment continued to decline, and construction employment was little changed.

Unemployment (Household Survey Data): The number of unemployed persons, at 7.2 million, was essentially unchanged in October, and the unemployment rate held at 4.7 percent.  A year earlier, the number of unemployed persons was 6.7 million, and the jobless rate was 4.4 percent.

The Household Survey a/k/a Current Population Survey (CPS) — which I find much less reliable than the Establishment Survey a/k/a Current Employment Statistics (CES) — showed a loss of 250,000 jobs, and a decrease in the Civilian labor force of 211k.

Birth Death adjustment was 103k — its comparable to October 2006, but still disproportionate  to actual  job creation. B/D gains of 25k in Financial and 14k in Construction make the entire data series suspect.

~~~

I’ll take these apart in a little while eventually, but I heard all I needed to know when I read "Employment in financial activities was essentially unchanged in October . . ."

Sources:

Employment Situation Summary
OCTOBER 2007
http://www.bls.gov/news.release/empsit.nr0.htm

CES Net Birth/Death Model   
OCTOBER 2007
http://www.bls.gov/web/cesbd.htm

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What's been said:

Discussions found on the web:
  1. Lyon commented on Nov 2

    Does anyone believe these numbers anymore?

    Bonds don’t as the ten year is at 4.38%

  2. zao commented on Nov 2

    http://blogs.wsj.com/economics/2007/11/01/kroszner-to-senate-still-working-on-it/#comments

    Randall Kroszner, whose term as a Fed governor is set to expire Jan 31, has been nominated for a full 14-year term by President Bush. But the nomination — and that of two newcomers, Capital One Financial Corp. executive Larry Klane and TowneBank executive Elizabeth Duke, are stuck at the Senate Banking Committee.

    Wow! do these people have the qualifications to be Fed governors. Krozner is bad enough. Bush is replacing the an entire cadre of high powered academics who have traditionally run the Fed with cronies. This issue should be given more publicity. One is a president of a small town bank in VA. She has a BA in fine arts. Highest qualification both have is an MBA. These are the people who are going to run monetary policy? Unreal. I would sell the dollar just on this. Start writing your senators, people.

  3. Old Ari commented on Nov 2

    You mean you haven’t been fired.

  4. Marcus Aurelius commented on Nov 2

    Bush would appoint unqualified cronies? Un. Be. Lieveable.

  5. Michael Donnelly commented on Nov 2

    Temp workers were up 20,000 and the y/y number looks good for this industry (see chart on my link if you want)

    Wages were down this month, and last month were revised down as well.

  6. Nova Law commented on Nov 2

    Ah, how utterly predictable. Good non-farm payroll numbers, and yet again “the numbers are false/fake/manipulated/unbelievable.” The same response that has been published after every piece of good economic news for the last five years.

    Meanwhile, yesterday may have represented the best buying opportunity since mid-August. I was buying yesterday.

  7. mack macdaniel commented on Nov 2

    Re: “service jobs”

    Except in esoteric “goodwill” terms, aren’t people a long term liability? I’m not sure I’ve ever seen a balance sheet that quantified employees as “assets”.

    Since a firm can’t “own” people, are they “leased”? It seems the Unions think so, since they try to create and enforce contracts based on terms of service.

    Next step: bonds and derivatives based on employment contracts.

    Dialing Goldman…

  8. michael schumacher commented on Nov 2

    Good luck with that

    buy those dips…..those institutions need all the “soft landing” they can muster.

    Ciao
    MS

  9. Brian commented on Nov 2

    22% of the job creation took place in the booming “Food Service and Drinking Places” industry. I guess Google added some more cafeteria staff.

    As an uncle of two recent college graduates that are working full-time at TGI Friday’s, I can support the validity of this data :)

    Oh, and temp staffing kicked in another 12% of the payroll gain. If this release was a company’s quarterly earnings you might say “the quality of the outperformance was suspect”.

  10. Pool Shark commented on Nov 2

    “I was buying yesterday.”

    Well then I guess you’re losing your a** this morning then!

  11. John commented on Nov 2

    Barry I must compliment you on the amount of research and work you put into your blog. FIRST CLASS!

  12. RichardN commented on Nov 2

    Nova, I don´t think Barry wants bad job numbers. Speaking for myself though, I just want the truth, and if those numbers are true then I wouldn’t exactly be buying, but I wouldn’t short either. The fact that it is so easy to see that they are not, leaves people with only two choices, either blindly go along (your case), or risk playing the truth.

  13. Neal commented on Nov 2

    Nova Law:

    In this up is down world, what is your belief as to why the Fed cut rates twice?

    Is there something other than a recession that the Fed is scared of that would lead them to cut rates, given the reported strength of the economy?

    Do you think they should cut again?

    Why did the market drop so precipitously yesterday (the day after the cut)?

  14. Costa commented on Nov 2

    “Total employment, at 146.0 million, was about unchanged in October.” –That was from the report. Doesn’t this mean that there really wasn’t any jobs created or am I just reading it wrong?

  15. Richard Glurrrrrrrrrrr commented on Nov 2

    Seriously, who -really- wants the economy to falter? I think it’s been shown time and time again that the released numbers are often strained through a filter of creative accounting to paint rosier pictures than reality.

    The government may think this is a good thing to keep a positive psychology going. Unfortunately, sometimes it doesn’t reflect reality, and leads to credibility issues in future numbers released, as well as making people unprepared for what’s actually going on and what’s going to happen in the future.

  16. brion commented on Nov 2

    yes! Are these NFP numbers not glorious komrade Law?!!
    Now excuse me, i must rush out to purchase a Bag to Hold all of my winnings in!!!!!!!!!

    oh, and “shame on the treasonous doubters, Ritholtz and Schumacher!!”

  17. Estragon commented on Nov 2

    Costa,

    The number you refer to (146MM) is from the household survey. The headline NFP job growth number comes from the (larger) survey of employers. Both have “issues”, which have been covered at length in previous posts.

    Neither is likely to give a real-time read on a trend change. Eventually, the NFP numbers will be reconciled to state tax records and give a pretty accurate reading. Looking back at (often significantly) revised data will appear to fit the facts, but the data as initially released is likely misleading.

  18. s commented on Nov 2

    hummm? Wage growth constrained while oil at record, consumer balance sheets stretched (and importantly an forward expectation that principle wealth creators are no longer there) and consumer staple companies talking about 5-10% price increases. Sounds to me like you just lost some serious purchasing power.

    Nominal wage growth is deminimus compared to nominal price gains. The equation is broken?

  19. kroniks commented on Nov 2

    Regarding the 166k, the New York Times says:

    “Adding to the uncertainty about the report, most of the job gain — 103,000 of the 166,000 net new jobs — came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.”

    What does that mean?

  20. Karl Smith commented on Nov 2

    I increasingly look to the ADP survey rather than BLS NFP. ADP doesn’t cover government of course but it is less noisy signal of private employment.

    After all, they handle the actual employment records.

    BLS tends to be revised towards ADP particularly in a turning point. This is of course due to B/D as the residual methodology.

    All of that is to say that the 100K from ADP is not that far off from the 130K private jobs from NFP. Makes the number less suspect.

  21. michael schumacher commented on Nov 2

    You can read the whole thing and come to the conclusion that best suits whatever your argument is, however this snippet trumps it all:

    “Employment in financial activities was essentially unchanged in October . . .”

    And the requisite 43K was added for construction……

    yes a wholly accurate report is there ever was one……..

    Ciao
    MS

  22. Estragon commented on Nov 2

    Karl Smith,

    In principle I agree that the ADP survey, based on actual payroll records, might be a better measure.

    Unfortunately, their results were quite wildly off the BLS results at times, so IIRC they changed their methods about 6 months ago so that their result would be a better predictor of the BLS survey. I have to assume this means they’ve stirred a B/D model into the mix.

  23. VJ commented on Nov 2

    kroniks,

    What does that mean?

    It means they are imaginary.
    .

  24. michael schumacher commented on Nov 2

    should’nt the machine start cranking out the “buffet to buy__________”

    The precious trend is in danger of being breached if they can’t claw back at least 80 pts from yesterday. It is a friday you know…

    Ciao
    MS

  25. michael schumacher commented on Nov 2

    back from lunch……

    there they go……gotta get that trend intact.

    To the minute……1pm

    Ciao
    MS

  26. Estragon commented on Nov 2

    MS,

    Trend looks okay if you’re investing with sheets of Charmin. If you’re buying with EUR/GBP/CAD, not so much ;-)

  27. Juan commented on Nov 2

    I believe that the employment population ratio and labor force participation rate both declined. Almost needless to say, this is not indicative of a ‘strong jobs market’. But then we should all be aware that headline data in particular can be politicized and, not only for the current administration, employment data surely fits the bill.
    I do wonder though whether there may be such thing as ‘peak propaganda’.

  28. Mr. Obvious commented on Nov 2

    Help me w/the B/D adjustment. Are those additions made because of changes in the workforce that a model spat out?

  29. Karl Smith commented on Nov 2

    Unfortunately, their results were quite wildly off the BLS results at times, so IIRC they changed their methods about 6 months ago so that their result would be a better predictor of the BLS survey.

    Better predictor of monthly estimates or benchmark revisions.

    If the former then that is disappointing since in the data I saw the BLS benchmark revision tended to be closer to ADP then the monthly reports

  30. ac commented on Nov 2

    I don’t see the big deal. Considering the weakness of previous months, not all months will look bad on the surface.

    Household going down is not good. I could argue September was better than October, but the point is, seasonal adjustments are made for a reason.

    The problem with the BLS is that their figures are overdone this decade due to birth/death model BS. It causes BED revisions downward almost every year outside the mammoth 2005 one.

    November, FWIW, doesn’t look as good. December looks negative.

  31. ac commented on Nov 2

    THE EMPLOYMENT SITUATION: FEBRUARY 2001

    The unemployment rate held at 4.2 percent in February, and total
    nonfarm employment rose by 135,000, the Bureau of Labor Statistics of the
    U.S. Department of Labor reported today. Large job losses continued in
    manufacturing, where employment declined by 94,000. Employment gains in
    several other industries, including services, accounted for the net
    increase in payroll employment. Average hourly earnings rose by 7 cents
    over the month.

  32. whipsaw commented on Nov 2

    Nova Law said:
    Meanwhile, yesterday may have represented the best buying opportunity since mid-August. I was buying yesterday.

    I’m not so sure about that altho I imagine that you made a little money today depending on what you bought and when. Some are saying that Wednesday was a Bull Trap, but I think that’s a bit dramatic- if the market had gone down dramatically then, it would have rebounded the next day anyway, and we’d wind up in the same place, that’s just the way it works sometimes. At any rate, I still have nice paper profits, just not as nice as they were.

    $NDX chart still looks fine and the destination for anyone who is going to try to push performance into the end of the year. But I’m beginning to think that $SPX has some problems that are going to involve fighting over the 1490-1520 range for the next several weeks altho it could break much lower if the financials continue to provide intrigue.

    NFP is always suspect and often counter-intuitive, but a regular trading hazard anyway. I’ll just say that I see a lot of recessionary and inflationary signs out in the Real World, but nothing that would induce me to do something like tie up cash in physical gold.

    Yes, I know, goldbugs, my Empty Secular Trust in Fiat Currency Humanism is heresy to the warmth of the Ancient Religion of Gold Worship, but I’ll take my chances. After all, I always have the option of converting to the Worship of Lead and Whisky should any of your Doomsday Prophesies come to pass and that will be more than adequate to re-balance my portfolio :) Flame away!

    ==whipsaw==

  33. John commented on Nov 2

    (Posted Below but in the Wrong Spot)
    I cannot tell Who has their Head Up Their Ass further on this (Lagging Indicator) Jobs Report. Kudlow or Cavuto…At least Kudlow had Jim Rogers on his show (who was also on Bloomberg for the same reason) to put the LIE to these numbers…
    Cavuto’s Head is the size of a Pumpkin… so I suspect it will not fit into his ass without a considerable amount of (Existential) Pain. So I’ll wager on Kudlow.
    Then, along with Legg Mason’s Bill Miller, we have some (Honest) rec’s to Buy the Financials and HomeBuilders…(any likelihood of a Recession now being averted because of the strong job numbers…)
    I figure since the CEO of Citigroup is now offering up His resignation, that Merril Lynch continues to have valuation problems/writedowns with their Mortgage Related Securities (which has now gotten the attention of the SEC)… and their CEO has resigned, the ongoing SubPrime Mortgage Mess/Credit Crises (which most CERTAINLY WILL NOT rear it’s Head at the likes of Wachovia, WaMu, Bear Stearns, JP. Morgan-Chase and/or GoldMan Sachs) and the ahh ‘Downturn’ in Housing has again bottomed, …it’s “all priced into the Market”…it’s time to buy these stocks…
    Let’s see. Oil now at nearly 96 dollars per barrel. NatGas/ Heating Oil on the Move…Stock Market becoming increasingly psychotic, speculative, and volatile…
    I can’t help but wonder what happens when our fellow consumers see a “4” (and change) or a “5” (and change) on those Gas Station Signs as they head out to the Malls in their OPEC friendly SUV’s in coming months…

  34. Charles commented on Nov 3

    Mebbe its me, but I see a Bull Trap in several of the oils now, that I’m looking to buy. So I just wait.

  35. Charles commented on Nov 3

    As to buy the homebuliders, won’t you be able to get all you want from the bankruptcy judge?

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