Today is the November Employment Situation Report.

Several factors suggest something not quite as “good” as the consensus expectations of a loss of 125k NFP. This is due to several factors: 1) The White House “leak” that unemployment will increase; b) A worse than expected ADP report; iii) Ongoing terrible Household Survey Data; 4) Continued layoff announcements (albeit at a slowing pace).

However, there are a few data processing glitches that might produce a surprisingly good number — mostly due to seasonal adjustments. I will explain in a moment.

What is the Street looking for? The median estimate of 82 economists surveyed by Bloomberg News is for a Payroll drop of 125,000 workers. If this is the case, it would be the smallest drop since March 2008. It would also mean that we would be seeing an “emerging expansion begin,” and the ending of the “worst employment slump in the post-World War II era.”

The Street’s economists expect a jobless rate to stay at a 26-year high of 10.2%.

What to watch: There are several things I watch closely month after month, and November 2009 is no different. Direct your attention to the following in the actual release.

1) Hours worked

2) Wages;

3) Temp Help

These are the leading aspects of employment within the overall release (despite the overall payroll situation typically referred to as a lagging indicator, these factors usually are ahead of the overall economic cycle).

One big factor: Seasonal Adjustments. Given how awful last year’s November data was, we could see some aberrational numbers as last year’s data skews this year’s SA. That could possibly skew the numbers upward in an artificial way. Recall that December 2008 saw a whopping job loss of 965,000 — tha might skew things, depending upon the methodology for seasonal adjustments employed by BLS.

Also worth looking at: U6 — the broadest measure of under employment in the US. That could tick higher, even if the Unemployment rate stays steady at 10.2%. Also, watch the Household Survey, which normally recovers before the Establishment Survey after a recession ends. It could provide some insight into the state of the overall contraction or expansion. And of course, the absurd BLS Net Business Birth/Death Model continues to show job creation where there is none.


The key question: How do traders react to either an upside or downside surprise?

A weaker than expected number could excite the bond ghouls, sending both equities and treasuries higher.

Too good a number, and pressure builds for the Fed to remove the easy money, accommodative policies, and ZIRP. This could cause equity traders to pare back positions. Unless they believe that profits will grow faster than easy money can be withdrawn, in which case its a moonshot.

That is the  expectations game, where you must anticipate what sentiment will dominate the monkeys pounding away at their keyboards.

Is good news bad news? Is bad news good? Or is good news actually good? To be honest, I haven’t the slightest clue . . .

BLS Employment Situation released at 8:30am EST

Category: Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

93 Responses to “NFP Preview: Expecting Good or Bad Numbers?”

  1. Jobless Recoveries: The New Normal, It Seems

    Given the downturn’s depth, some optimists think jobs will return quickly. They got some ammunition on Thursday, when new weekly claims for jobless benefits fell to a 14-month low. Payroll cuts, meanwhile, have steadily gotten less bad and could end soon.

    But fast-snapback hopes are countered by a mountain of data suggesting the recovery from this recession will be just as jobless as the prior two.

    The percentage of jobless workers on permanent layoff, with no hope of getting called back to work, is at a record 55.1%.

    A record 9.3 million are working part time because there’s nothing else available. Employers might work them harder before hiring more workers.

    New claims are falling, but the number of people drawing regular or extended unemployment benefits is holding steady at nearly 10 million.

    Since May, more than a million workers have left the labor force, which has essentially stagnated since November 2007, notes Miller Tabak economic strategist Dan Greenhaus. If and when people look for work again, they could push unemployment, which is a percentage of the labor force, much higher.

    It is likely no accident that this and the prior two recoveries have been more or less jobless, with globalization and technology making it increasingly easy for companies to sharply cut labor costs.

  2. JasRas says:

    At some time the economic numbers and the market numbers will reconcile–and like my checkbook, an adjustment will be made…Until then, the market is going to do what it does on massaged numbers and by those looking for the best case outlook.

    I am less worried about the market/economy thing and more worried about what it means to have this many unemployed/underemployed in the population. The idle mind is the devil’s playground… especially among disenfranchised, obsolete, unwanted… It is great that companies can be more efficient and use less employees–for companies and stock owners; but for society, this is not necessarily a good outcome.

  3. VennData says:

    “…where you must anticipate what sentiment will dominate the monkeys pounding away at their keyboards…”

    Banana for your thoughts?

  4. Concerned American says:

    Amen JasRas. Maybe there will be an all out war on the greedy CEO’s?

  5. torrie-amos says:

    wow, shame on me

  6. torrie-amos says:

    Ben provides a christmas present for all.

  7. VennData says:

    After today’s payroll number, I hope Washington forgets the Pelosi push to use TARP for new jobs programs, use it to pay down the debt.

  8. Becket says:

    The ADP estimate was 169,000 and the BLS number is 11,000. I know the ADP is generally off but it is in the same ballpark. This is an error rate of 93.5%. It seems that one methodology needs to be revised.

  9. VennData:
    Are you serious? Did you see the data and read BR’s post? I wonder what he has to say now that the data is out. Me thinks the numbers are being cooked again.

  10. And the stock futures skyrocket while gold gets crushed. It is only somewhat surprising that the unemployment rate has fallen to 10%. Based on the fact that unemployed people fall off the unemployment rolls eventually, it becomes very difficult to print a 10%+ number for an extended period of time. That’s why I am confused when predictions are made of 11%+ unemployment in the next year or two. U6 will be the only worthwhile number to report going forward.

  11. tagyoureit says:

    Bad is good, good is good. It’s all good! SA U6 is down!

    No need to raise rates, everything is ‘frah-gee-lay’ (Italian for sexy lamp). Let’s put it in the window!

  12. torrie-amos says:

    it’s a game change imho, first off what are the bears thesis now, and under-invested bulls are going to be scrambling……………..a pullback would be nice……………..

  13. the bohemian says:

    if anybody read my post on the open thread- i said there was a good chance the numbers would improve this morning-

    something very similar happened like this only a few months ago- advance notice- bad- actual- good

  14. Adult Franklin411 says:

    everything is ‘frah-gee-lay’ (Italian for sexy lamp). Let’s put it in the window!

    Great reference!

  15. Mike in Nola says:

    Anyone here not skeptical? Not talking to you F411. Makes no sense compared to what’s going on elsewhere.

    No need to watch CNBC today. Don’t want to watch Kudlow strut.

    My poor bonds :) But the nice thing is I can keep getting interest till the truth once again emerges.

    BTW, has anyone said how they will correct for the 800k undercounted unemployed because the Birth Death model is flawed?

  16. Adult Franklin411 says:

    About 2.3 million persons were marginally attached to the labor force in
    November, an increase of 376,000 from a year earlier. (The data are not sea-
    sonally adjusted.) These individuals were not in the labor force, wanted and
    were available for work, and had looked for a job sometime in the prior 12
    months. They were not counted as unemployed because they had not searched
    for work in the 4 weeks preceding the survey. (See table A-13.)

    Among the marginally attached, there were 861,000 discouraged workers in
    November, up from 608,000 a year earlier. (The data are not seasonally ad-
    justed.) Discouraged workers are persons not currently looking for work be-
    cause they believe no jobs are available for them. The remaining 1.5 mil-
    lion persons marginally attached to the labor force had not searched for
    work in the 4 weeks preceding the survey for reasons such as school attend-
    ance or family responsibilities.

  17. franklin411 says:

    I told you so. =)

    But Venn, we still have a long slog to get back to full employment, and I think a new jobs program is very necessary. If we spent just 1/7 of the TARP on repairing our crumbling infrastructure, we would create millions of jobs and get safe/efficient bridges, highways, and utilities to boot.

  18. [...] what sentiment will dominate the monkeys pounding away at their keyboards,” Ritholtz writes at The Big Picture. “Is good news bad news? Is bad news good? Or is good news actually good? [...]

  19. the bohemian says:

    f411- pack your bags and take a trip to celebrate- because you are always right! I hear Fragile’- a province somewhere in Southern Italy is nice this time of year.

  20. franklin411 says:

    Actually, if I went anywhere, it would be to England to worship at the shrine of John Maynard Keynes for saving us. And then I would go to Austria to pee on Hayek’s grave for getting us in this mess.

  21. Marcus Aurelius says:

    Nothing has changed.

  22. CTX says:

    nothing has changed? just that the sp could break out to 1200 sooner than we think, that is what has changed- bs govt #s are the usual

  23. the bohemian says:

    be very careful everyone-

    the market cannot rally on all news- good, bad- etc- keep in mind that improving #’s gives more impetus for the Fed to stand down on QE, purchase of MBS, ZIRP- which is the fuel the market has been using to rally-

    sometimes things don’t play out like you think they should

  24. Eric Davis says:

    WOW! Barry..

    look at your comments.. 20? That is about as quite as i’ve ever heard it over here!

    I guess all the bears are betting with the bulls on the Christmas Rally!

  25. Mannwich says:

    A “strengthening” real economy means no more goodies for Wall Street and other assorted corporate crony welfare queens. Mr. market might not like that in the end. The argument for rate hikes coming and an end to “stimulus” and corporate welfare is strengthening. Beware the unintended consequences of all the interventions.

  26. franklin411 says:

    Well normally there would be all kinds of “yeah, but” comments. Yeah, but there’s nothing ambiguous about this report. Everything improved–seasonally adjusted, non-adjusted, temp hiring, work week, average wage, y-o-y, m-t-m, etc… And now factory orders are out…+0.6% and September was revised higher!

  27. torrie-amos says:

    who cares wether the numbers are cooked or not, there is confidence issues at hand, it’s been a grind of a year, to close with a whew, it does actually look like the worst is over, and maybe these guys do have a tiny handle on things is very positive, it does not mean we are out of the woodworks, it just mean that the total worldwide collaborative effort has done it’s job…………….things still need to unwind and some normalcy return, and there is the issue of future inflation, and lot’s of other problems, yet, this number is huge for stability in home sales/prices and future foreclosures next year

  28. the bohemian says:

    “who cares wether the numbers are cooked or not”

    i agree w/ that statement- because if even if they are massaged- they have been massaged from the beginning-

    so nothing has happened that is egregious- there is no extreme departure from how they have been calculating the numbers in the past

  29. Marcus Aurelius says:

    The structure of our economy is still rotten to the core. Climbing higher on a rickety ladder is not a good thing, but fools must do what fools do.

    Nothing. Has. Changed.

    Show mw new industries. Show me jobs for those disenfranchised (especially jobs that have growth potential or that pay a living wage). Show me bad assets being marked to market. Show me a resumption of lending and borrowing. Show mw low interest rates. Show me a sound, well regulated banking system. Show mw legislation that regulates the creation of new (Improved!) toxic financial ‘products’. Show me reduced spending by the Federal Government. Show me solvent states.

    Show me some fundamental change.

    Why shouldn’t the markets go up when everyone has cake to eat? Famous last words.

    F411: even in the cheerleader outfit, you still look like a dude.

  30. torrie-amos says:

    another reason why i believe it is a game changer, all fund/money mangers will now sit down and have a long bias, bullish sentiment for next year, which means the market, sans a black swan event should act normally for the most part, which means it is now a sector rotation game for fund managers, a trend following strategy for floor/futures traders, and bears have almost no leg too stand on for the most part except individual stocks with weak declining fundamentals………………the fund managers will sit down and think, hmmmm, okay, we should get 20% gain next year, and you have some clear support at the 950 level for support and pullback for rotation of sectors………………the only negative on the ben franklin is inflation, which would be a runaway in commodities, ie, oil back too 140, amongst others, GS released a huge 2010 commodities report……………

  31. the bohemian says:


    no doubt- although mortgage rates are as low as they have been due to MBS purchases by the Fed-

    but i guess my concern is- maybe TPTB don’t care- you know “one world”- Obama the “post” American President- wage arbitrage all around-

    the country had been hollowed out industrially over the last 30 years-

    tariffs anyone? trade wars?

  32. Lurker McGee says:

    @MA: I think you just won the internets for today with this comment:
    F411: even in the cheerleader outfit, you still look like a dude.

  33. Mannwich says:

    @torrie-amos: I imagine that would be a rather big “negative”, no?

  34. ashpelham2 says:

    I’d like a link to that GS commodities report if possible. I’m just not finding it.

    The whole lynchpin in ’10′s recovery is what will jobs do. Sure, we came back “down” to 10%, but we can’t hold there and expect a healthy economy. And, let’s say, we have a strong hiring picture in ’10, with lots of job creation, will energy knock us off the perch? Like Torrie Amos said, $140 oil is what pushed us over the cliff that we were barely hanging on to in the first place.

  35. Adult Franklin411 says:

    Everything improved–seasonally adjusted, non-adjusted, temp hiring, work week, average wage, y-o-y, m-t-m, etc… And now factory orders are out…+0.6% and September was revised higher!

    No, it didn’t. See my 9:32 am post (which you would have read if you had actually gone to the BLS site to read the release).

    +35% discouraged workers YoY.
    -1,000,000 Civilian Labor Force YoY
    Average UI duration at an all-time post-WWII high
    Continuing claims on downward trend with no one claiming net job creation during the same period

  36. hue says:

    the 2009 market mantra since march has been buy on the rumor, buy on the news. they always buy on jobless friday, good or bad report.

    since bulls and bears are celebrating the santa rally, wonder if the grinch will appear in the night and steal christmas gifts.

  37. MRegan says:

    “Show me solvent states.”

    Sorry, I think the idea is to achieve ‘dissolved states’. A dissolution of the State. Case in point: North Carolina.

    If they will order people to torture children in Uzbekistan, what won’t they do? But at least the NFP # has changed in some manner that will attract our attention, and did you hear that Tiger Woods was snoring…and he humped a bunch girls, wow! and ohh! look, a shiny metal object…

  38. the bohemian says:

    adult f411-

    do you realize you are arguing with your former self?

  39. Mannwich says:

    I strongly urge everyone to watch these clips of economist Andy Xie here:

  40. Mannwich says:

    The third clip about the U.S. is especially illuminating (well, maybe not for f411).

  41. Robespierre says:

    Numbers are being doctored to melt away resistance to Dr. Ben confirmation. They will show the real numbers (less cooked :) once he is confirmed. Bet on it

  42. the bohemian says:


    i see that you are a multi-blog juggler like myself-

    i must admire such skill and dexterity

  43. Mannwich says:

    @bohemian: I’m all over the place. An information hound.

  44. hue says:

    you’d think the Dow would be up 300 points or more on such good not as bad news, the dj futs popped 85 at 8:30 and has not done much since, rolling over a bit as i type. i guess it’s still early.

    only in the great recession that you can cheer -10k job creation.

  45. Mannwich says:

    This also means that jobs are right around the corner, so might as well jack up those credit cards on your holiday purchases, folks. You can always just pay it back later when you get that great job in January (or February, or March, or April, May?…………..)……….Nevermind.

  46. the bohemian says:


    as i opined earlier- the numbers are not necessarily good news for equities-

    what a crazy mixed up world we live in

  47. Adult Franklin411 says:

    @bohemian: I guess I need to stop living in the past, huh? ;-)

  48. Mannwich says:

    @bohemian: Exactly. Good economic numbers actually put more pressure on the Fed to stop giving away the goodies a bit soon for their liking. Look for these kinds of numbers to worsen again in early ’10 to give them justification to keep the party rolling for their friends.

  49. Eric Davis says:


    I’m not arguing Economics, I’m making sentiment observations.

    Some have a thesis that poor price action off of good news is a bad sign. Who knows when, but at one point the “Greatest fool” comes in, to play the shellgame.

  50. Marcus Aurelius says:


    Roses are red,
    Violets are blue,
    I have ADHD, and . . .

    . . . hey! Look! A bird!

  51. hue says:

    hey capt bohem, what’s with the name change?

  52. Marcus Aurelius says:


    Hadn’t thought of Benny’s confirmation hearings and his need to maintain full employment for himself and his cronies, at any cost. Good point.

  53. the bohemian says:

    name change- what?

    just messin’ around- with my new “sport” posting attitude- no longer angry- just happy (-:

    anyway- use to post as “the bohemian” some time ago and have resurrected him-

    ahab’s still around though


    lmao- great poem !

  54. constantnormal says:

    Ah, the perils of trying to assess a complex thing via a single number.

    Fewer people than expected lost their jobs last month.

    How many people seeking employment found it? Was it at a compensation commensurate with their skills and experience, against the backdrop of global competition?

    And of the people who would like jobs, how long have they been seeking them?

    How many new workers seeking employment entered the would-be work force? And how many retired or died, or won lotteries? (2009 not being an election year, there were probably not as many lottery winners)

    Did capacity utilization increase or decrease?

    How about the GDP?

    How has the government’s (state and federal) financial position changed? Is it better able to encourage re-employment of the unemployed, or less able to do so (money is the only effective way they can do this, so it becomes a question of what the surplus positions are (insert laughter here), and what our ability to borrow is (insert even more laughter here).

    And where the government is applying encouragement to bolster employment, is is being concentrated in small businesses, which employ more people than larger corporations, on a sales-generated-basis (smaller firms are less efficient, so they employ more people to produce products, on a per-revenue-dollar basis) — or are stimulus funds being wasted?

    Ah, the perils of trying to assess a complex thing via a single number.

  55. MRegan says:


    Very subtle. “…hey! Look! A bird!” If one reads language and referents as gestural, the implicit message isn’t so friendly.

    “Reject your sense of injury and the injury itself disappears. “- Marcus Aurelius

  56. Mannwich says:

    This number may get some retail “sidelines” cash in though. Just at the right time for the insiders to sell it to them.

  57. VennData says:

    Talk Is Cheap, Mr. President, Where are the Jobs?

    By Andrea Tantaros –

    See the jobs now? Opinions are cheap Ms Tantaros. Oh, I know… it’s a conspiracy right? ROFL.

  58. Mannwich says:

    @VD: Why are you so obssessed with FOX and the teabaggers? I don’t think anyone here pays much, if any, attention to either. You might want to go troll a right wing blog to get a reaction.

  59. hue says:

    capt bohem, ahhh, i haven’t been around the block long enough to know you’re back to the future.

    Manny, have you hooked up with Harry Wanger for lunch, i thought i saw something the other day somewhere about postponing. maybe it was just a dream …

  60. Mannwich says:

    @hue: No, I haven’t. He mentioned going to Broder’s tonight in my neighborhood but I have plans with my wife and another couple. Maybe another time. I might be willing to do that. I am a bit curious about Mr. Wanger.

  61. the bohemian says:

    peace out all-

    will check in later

  62. Marcus Aurelius says:


    According to John Cleese, all humor is based on our recognition of the negative aspects of things.

    Like this:

    Then again, I’m not a very friendly person, and I really hate people with ADHD.


  63. uno says:

    If anyone else is buying major fractal “sell” signals, I have another bushel for you.

  64. Thor says:

    Bohemian – I think I used to chat with you over at ZH earlier in the year, I had no idea you were Ahab :P

  65. MRegan says:

    I’m glad my name isn’t Henderson or I would swear you were telling me to go off myself.

  66. Adult Franklin411 says:

    Fritz Henderson?

  67. uno says:

    Smartass comments aside, we are in the process of building a truly major fractal “sell” signal.

    You’re welcome.

  68. MRegan says:

    NY spot down 39.10

    Sell signal. In what?

  69. uno says:


  70. uno says:

    The major stock market indices. All of them.

  71. Adult Franklin411 says:

    Fractals. Can’t you read? F-R-A-C-T-A-L-S. Damn.

    What’s a fractal?

  72. uno says:

    Google for the two words “fractal” and “trading”.

  73. Marcus Aurelius says:


  74. Marcus Aurelius says:


    Funny skit!

  75. Mannwich says:

    The Wall Street welfare queens are on their own now. Bad sign for the Mr. Market, who likes the free goodies.

  76. uno says:


  77. Marcus Aurelius says:


  78. uno says:

    See…? Who says trading can’t be fun…?

  79. hue says:

    even Thor didn’t know about the bohemian. it’s like Sybil in the comments.

    friday night? wouldn’t the busy retailing exec be spending time with the fam. harry wanger is kaiser soze.

    the gov’t can’t even massage numbers right. this number is too good, looks like Barry nailed the reaction.

  80. Mannwich says:

    @uno: Thank God it’s at least getting interesting again.

  81. MRegan says:


    Regan and Reagan are variant spellings of the gaelic word for angry or impulsive (Riagáin). I’m thinking you might have already known that.

    Sell signals:

  82. uno says:

    @Mannwich: Great word, “interesting.”

    Root meaning: “to be between,” from inter- “between” + esse “to be.”

  83. uno says:

    Time to hit the gym. Have fun, folks….and remember the ultimate truism:

    “If you’re not having fun, you’re not doing it right.”

  84. torrie-amos says:


    a resounding no, Marcus, cause we are negative, unwindin of dollar, a pullback is needed imho, the ten year pivot on the dow is 10,500 which we’ve been messing with for 3 weeks, heck, i’m only 13% long, lol, follow the trend, which imho, will be up next year, after a healthy pullback now, the market anticipated easing forever, again some stability hopefully is hear to stay

  85. Marcus Aurelius says:


    I didn’t, but I do now. Despite myself, I learn something new every day, thanks!

  86. [...] employment situation, so much as a dramatic halt in the decline.  I think Barry Ritholtz is right in suggesting that Seasonal Adjustments including last year’s relatively anomalous drop are artificially inflating the headline [...]

  87. HCF says:

    Helluva rally, eh? Whoops, I guess it’s no more…


  88. MRegan says:

    Interest info on labor (or rather the structuring of the context in which it can best be ‘used’.

    Chevron’s $40 Billion Gorgon Plant Sparks Worker Hunt


    “Contractors for Chevron and partners Exxon Mobil Corp. and Royal Dutch Shell Plc in the Gorgon liquefied natural gas plant plan to pay premiums of as much as 40 percent for welders, pipe fitters, project managers and engineers, recruiters said. They expect to hire in the Middle East, Latin America and Europe.”

    As for the latinate tinge to the thread:

    Ente et Esse:

    “A small error at the outset can lead to great errors in the final conclusions, as the Philosopher says in I De Caelo et Mundo cap. 5 (271b8-13), and thus, since being and essence are the things first conceived of by the intellect, as Avicenna says in Metaphysicae I, cap. 6, in order to avoid errors arising from ignorance about these two things, we should resolve the difficulties surrounding them by explaining what the terms being and essence each signify and by showing how each may be found in various things and how each is related to the logical intentions of genus, species, and difference.”

    Story of my life…

  89. torrie-amos says:

    manwhich, thanks for link on andy, very intersting, learned alot

  90. torrie-amos says:

    ashphelham, the GS report is over at, i’m sorry i’m not computer literate enough to link it, it’s 68 or so pages long, pretty good read, and 2-3 very good take aways, if you like stuff like that look at manwhich’s link for Andy Xie, that was also pretty good

    my main take away on GS commodity report was, during the decade miners did not expand, they basically bought one another, so emerging markets which are growing will push metal prices higher which are constrained by supply, and mature markets will have no choice but to pay the higher prices, which imho hurts them, they had a similar believe on oil, emerging markets will use and buy more which will drive price as opposed to mature markets who’ll have to go along for the ride

    also, they were pro meat, lol, emerging markets with more money will want meat, and cattle and hog supply is at historic lows due to problems we had

  91. Greg0658 says:

    didn’t read much of these .. busy today .. maybe this was said already .. Nov is the the gear up for Christmas in our 50% days of the 70% consumer economy .. but don’t let me rain (snow*) on your Macys Thanksgiving Day Parade …. what number is the Jan 8th week predicting?

    * global warming /climate change – now shown to be a lie*** for someones job scheme/flavor of the day

    things WILL bounce back – it just has to inflict pain for a % of the pop
    this systems been with us a while .. playing games .. we call on for survival with each other

    Band Kids Unite / kick these jocks up the backside
    Triumph – “Hold On”

    *** I’m joking … blah blah blah

  92. mathman says:

    The happy talk about the economy and job numbers is a lot like those who are so quick to dismiss climate change as a hoax – grab anything that seems to indicate your (misinformed) position and shout it loudly (so you’ll convince yourself).

    There will be hell to pay for our misuse of the planet. All the wealth and money in the world won’t save us if we can’t grow food.