NFP -62,000, Big Revisions Downwards




Nonfarm payroll employment continued to trend down in June (-62,000), while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Employment continued to fall in construction, manufacturing, and employment services, while health care and mining added jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

NFP payrolls shrank for the sixth consecutive month.

The bog news was the revisions — down another 52,000 for April and May. When we get these revisions next month for June, don’t be surprised if we see a major change.

Also, note the Unemployment Claims jumped to 404k . . .

And now, the Birth Death Adjustment:

June 2008 was 177k versus June 2007 155k
Construction Gains +29k
Professional & Business Services +22k
Leisure and Hospitality +86k

The last is my favorite: Given the massive decrease in travel, an 86k gain in this sector is very hard to believe…

Birth Death Model Adjustments
click for jumbo table



BLS, July 2008


Birth Death Model


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What's been said:

Discussions found on the web:
  1. rj commented on Jul 3

    Leisman just said on CNBC that in that report the government added 29000 jobs.

  2. JAN commented on Jul 3

    Not as bad as you predicted Barry, but not good.

    And the 6 cents an hour increase is great news, that extra $124.80 a year will take care of the gas prices. Oh, wait.

  3. leftback commented on Jul 3

    All the bad news priced in. Here comes the Barry rally ??

  4. Paul in NYC commented on Jul 3

    Is it still a rally even when you are so far in the hole?

  5. Space Cowboy commented on Jul 3

    Word for Today: Demogranomics

    Note: The following is reposted from the cwei board on and was not written by me.

    Relative to your perception(s),
    as always, your mileage may vary…..


    Demogranomics – It’s over..

    It’s over. Economic prosperity as we knew it is dead. This debt thing will affect the economy for several years – but there is more. I just read an article where a small bank has no money to lend at all because the interest they would have to pay investors is too high and there isn’t even a market anymore for selling that debt. They can’t sell equity because it dilutes current shareholders too much.

    By the time we work through these debt issues we will be deep into baby-boomer retirement. The boomers are the ones that gave us the growth over the last 20 years. When you have a generation of 49 million being replaced by 80 million you are going to have growth. The next generation after the boomers is almost equal in size. No growth will be coming from this group when they reach their most productive years.

    Then you have to think about the cultural changes that came about during the boomers years. How much extra automobile production was necessary to go from a driveway with one car in the 50’s to 2 or more by the 90’s? Think of all the extra building materials used over the last 40 years to build two and three car garages instead of one, or in many caes just carports.

    And women went to work. Just think of all the extra clothing that was bought as more and more women entered the work force. How do you replace that growth? How about closest space?. Look how many industries may have seen higher growth from houses getting larger. Easily two to three times more toilets were sold per house than what we saw prior to the fifties. The average size home in 1970 was 1500 square feet. In 2005 it was 2,434 square feet.

    And this all came about with cheap energy. Cheap energy is gone forever. The means less disposable income to buy those extra items that we all bought in the last 40 years.

    Then we had the break up of the family as divorces became more common. The average size household in 1950 was 3.38. It was 3.68 in 1940. Today it is about 2.57 people per household. If we still had 3.38 folks per household there would be a need for 15 to 17 million less households than what we have today. Think about how much that contributed to growth in the boomer years. As the economy slows households may start to get larger again as many will no longer be able to afford to live on their own. I can vision large subdivisions becoming ghost towns.

    You won’t read anywhere about what I mentioned above. Nobody that has the floor has thought much about where past growth came from. They are too quick to just assign it to the size of the baby-boom generation. It is way more than that. A generation that through it’s size and mostly cultural changes gave us an economy on steroids – an economy that many take for granted as just being more of the norm that we became accustomed too.

    …and there is more I could get into to prove my point about the death of economic prosperity for at least the next 15 years.

    I was going to write a book about this stuff but probably will never get around to it. The consequences to the next generation and those after are going to be monumental.

    I was going to title the book
    ‘Demogranomics’. It’s a word I coined. Go ahead, google it. It’s the study of the demographics and the economy of the boomers.

  6. Paul in NYC commented on Jul 3

    Ususally when folks “never get around to it”- it’s because it wasn’t worth doing in the first place. And in this case it’s because there’s not a single original thought to work from.

  7. Rob commented on Jul 3

    52,000 revision! One of the things that struck me odd is the volatility. When the job numbers are positive, they range all over the place. Whe they are negative they are in a much tighter range! Look at the first chart on page 2.

  8. Chad commented on Jul 3

    @Barry – There is no way that I believe any of the birth/death adjustments. How can construction increase?

    However, I’ll say that my street level evidence is saying that we are getting a lot of Euro travel to the states. I’ve recently been to Vegas for work and I’m currently sitting in Ft. Lauderdale on vacation and noticed a lot more non-english speakers than I’ve seen before.

    Could this have an affect in the Leisure and Hospitality segment of the US?

  9. bluestatedon commented on Jul 3

    Construction Gains +29k
    Leisure and Hospitality +86k

    I wonder what goes through the minds of the people inside the BLS who are tasked with compiling and reporting these numbers. Are their minds just turned off, dreaming instead of winning the lottery or shagging the hot co-worker in the adjacent cubicle? Are they sniggering amongst themselves, “Man, anyone who believes this crap we’re putting out is an idiot!!” Or are they true believers? “Well, this is what the formula produces, so it must be right. Our economy is truly awesome, since we’re able to produce 29,000 new jobs in construction at the same time that residential construction has cratered!! Woo, Kudlow rulz!”

  10. Steve Barry commented on Jul 3

    Longs got what they wanted…only .25 from Trichet and under 100k phony jobs number…bring it on. I guess oil is the wildcard now.


  11. ReturnFreeRisk commented on Jul 3

    There you have it. Barry pretty much covered it all. As for the rally….spooz down 2 bucks now. oh well…

  12. jj commented on Jul 3

    Barry’s forecast was essentially correct.
    114,000 new job losses were reported today (June + prior revisions). The full amount must be on the table, not the BLS monthly “shell game” numbers.

    Space Cowboy – there are plenty of books on the market regarding baby-boomer demographic impacts, forecasts, etc. Author Harry Dent comes to mind. Disregard if you have read these already.

  13. trackerman commented on Jul 3

    I agree with jj. You were right on. And seeing that the market is now down, I think that traders see that the total job loss was 114K with revisions added in.

    Of course, by showing half the job loss in revisions, the BLS softens the headline number, which is all you see on news reports (“Job loss in line with expectations, -62K vs -60K expected).

  14. Stuart commented on Jul 3

    “Longs got what they wanted…only .25 from Trichet and under 100k phony jobs number…bring it on. I guess oil is the wildcard now.”

    That’s what it takes these days to rally the market.. How sad is that.
    Another report, another month of absurd BLS birth/death model adjustments. There’s not a chance in hell construction added those jobs in reality, zero. Yet, what the hell, they’re official figures and the market trades on official figures. “Officialdom” knows this, hence the continued onslaught of in your face BS.

  15. trackerman commented on Jul 3

    The talking heads keep saying that if we were in recession, these job loss numbers wouuld have to move to over -200k. Did the BLS use the birth/death model in any previous recession? This item alone can explain this conundrum. Without these huge additions each month, we would see the proper numbers!

  16. Bruce in Tennessee commented on Jul 3

    The ISM services just released…most say 70% of our economy now…the scary part of this was the employment subset….it came in at 43.8….extremely weak…

    There is no doubt that we are in the early stages of a rapid rise in unemployment…

    Bruce in Tennessee

  17. gunthestops commented on Jul 3

    I think Space Cowboy is calling a bottom—Telling everyone to give up and go home for the next 15 years–the sky is falling–lol

  18. Stuart commented on Jul 3

    The ISM report completely shatters that BLS leisure and hospitality figure. The pressure on the bank’s balance sheets is enormous, in fact, I wouldn’t be surprised if we find out later that several of them were already being quietly managed by the Feds right now. Tin foil perhaps, but in today’s world of “if they don’t know, it doesn’t exist” world of management policy, seemingly adopted as “best practice”, it really would not surprise me at all.

  19. Space Cowboy commented on Jul 3

    “I think Space Cowboy is calling a bottom—Telling everyone to give up and go home for the next 15 years–the sky is falling–lol”

    Posted by: gunthestops | Jul 3, 2008 10:37:00 AM

    GTS: As I stated, I did not write the article (I am not that talented, I freely admit my many flaws: one of which is that I cannot time the market)

    Observation: All those McMansion’s w/big PU’s & large suv’s in the driveway are begining to experience ‘sticker shock’ as the co$t$ to fuel their life style (1 hour commute each way, not to mention those heating/cooling costs of a 4k plus sq ft residence) escalate and no way (Jose) are energy costs returning to ‘the good old days’.

    Reverse Migration?

    So what to do when the RE bloodletting increases as the number of arm’s begin to leave vast numbers of housing tracts growing weeds?

    Your mileage may vary….. Happy 4th of July

  20. liz tool commented on Jul 3

    If you work for a temp agency you are considered employed but if you lose that job no matter how many years or how steady the work is, you cannot collect unemployment because your work was not “guaranteed”.

    Furthermore if you are on unemployment don’t bother signing up to a temp agency for the sake of keeping your self-esteem or honestly wanting to work…it confuses the system if you work for a day or two and report it. They will immediately stop payment and it will take a week or two for them to get around to interrogating you. In the meantime you will fall behind in your bills because they couldn’t just produce a check deducting what you earned for the few hours you worked.

    If you are enrolled in night classes and lose your day job do not tell unemployment. They do not care if you are trying to “better” yourself, they want you to be available to work 24/7!!!

  21. AJR commented on Jul 3

    I have the impression that using the term “recession” for what we are witnessing is not correct. I think we see a quite impressive nominal wealth destruction taking place. The music is playing and when it stops some people will be without chairs…and that is will go on for some time.

  22. cm commented on Jul 3

    liz tool: Can you back up your assertions about temp jobs and night classes? The rules may differ between states, but agency employment is employment. I’m not aware of any concept of a job being “guaranteed” (which job is BTW?) that would qualify or disqualify you from benefits.

    Also I don’t believe that any place has a literal 24/7 availability requirement.

  23. zell commented on Jul 3

    The gov’t always gets the first spin. He who spins first, spins best.

  24. Mark E Hoffer commented on Jul 3

    re: “Demogranomics – It’s over..”

    that cat should read some Bastiat..he, probably, quietly bemoans the advent of Car headlights and lightning rods, as well, for they reduce GDP.

    and, this: “and there is more I could get into to prove my point about the death of economic prosperity for at least the next 15 years.”–is the perfect example of, yet, another Idiot conflating Finance with Economics..

  25. NC Jim commented on Jul 3

    Construction jobs up ? BS! (at least around here)

    The local fishwrap ran a story which interviewed the owner of the local pawnshops. He bragged that he could forecast the economy better than all the economists with their PhD’s.

    A couple of key points he made:

    1) 2007 was a record year and 2008 was well above 2007.

    2) He knew the economy was in serious trouble when he started seeing professional grade tools being hocked meaning skilled craftsmen were giving up.

    3) Stories of women hocking creap jewelry for a few dollars in order to buy gas needed to get to work for a few more days.

    What shocked me was that loans made on collateral (what pawnshops do) were charged an interest rate of 22% per month.

    Are there no usuary laws? Guess not. Pawnshops must have powerful lobbys in Raleigh.


  26. liz tool commented on Jul 3

    Your so lucky I am waiting for Fed Ex, Because I usually wouldn’t look at a previous posts!!!

    I was wrong stating that the JOB wasn’t guaranteed (sorry). It was the HOURS and it happened to a relative who is a CNA. She broke her leg skiing and couldn’t work for a month…because her HOURS weren’t “guaranteed”. Maybe if you are working for a temp agency they don’t pay into unemployment insurance??? But I can assure you most people I know have no idea (including myself) where the hell the money they take out of their paycheck goes!!!

    The college night classes and the extra work at the temp agency happened to my brother. After yet another interrogation they let him continue to receive unemployment while taking a night math class but only on the condition that he drop his class if he is offered a job that would interfere with his class! At 44 he quit his more lucrative lumber mill job because he really wants to be a teacher and last term got straight A,s! Yes he now has a job, we come from a military/farm family and for us being on unemployment is only slightly less shameful than being on food stamps (which no one in my immediate family has EVER been on)! BTW he has no insurance and the “sliding scale” clinic charged him 65 dollars for a doctors visit who told him “Gee it is too bad you don’t have insurance because we can’t help you” He has a hernia in his groin.

    As uneducated as I am I did read ATLAS SHRUGGED and everything else Ayn Rand wrote when I was in high school. Believed every bit of it! Now in the last 15 years I see what is happening to my co-workers, family and friends and have slowly become a Socialist.

    As I have said before there is a great disconnect between the income classes and one does not know how the other lives or what they experience. After reading the percentage of millionaires on Mr.Ritzholtz’s blog I thought y’all needed to hear from the extreme lower income class bad grammar and all!!

    My package arrived and now I’m off for the beautiful Oregon wilderness!!! (Getting eaten by a cougar or bear doesn’t scare me but being responsible for my IRA does!! That is why I read THE BIG PICTURE everyday. THANK YOU!!

  27. Mark E Hoffer commented on Jul 3

    Posted by: NC Jim | Jul 3, 2008 1:07:29 PM

    “that he could forecast the economy better than all the economists with their PhD’s.”

    is a great example of why ‘Economists’ need to be snorting more exhaust fumes and less laser toner..

  28. Montaigne commented on Jul 3

    I’m glad a socialist is down with FedEx and not the U.S. Postal Service.

  29. cm commented on Jul 4

    liz tool: Thanks for following up. I will research the “hours” thing. As for being harassed over that night class, I know from second-hand experience in another jurisdiction that some unemployment and welfare case workers can be quite unsympathetic and bullying. And when I say “bullying” that includes stepping outside of their guidelines of what they can represent and what jobs they can put to their “clients”. But I don’t know your local laws.

    As for being on the dole, I would view it as a right to which you get entitled by paying payroll and other taxes (or if not you then people subject to the same applicable laws as you), not a shame. I presume you wouldn’t consider it a shame either if your insurance covers a car accident/damage or a house fire.

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