NFP: -85,000 (So Much For that Upside)
Establishment Survey Data: Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.
Household Survey Data: In December, both the number of unemployed persons, at 15.3 million, and the unemployment rate, at 10.0 percent, were unchanged. At the start of the recession in December 2007, the number of unemployed persons was 7.7 million, and the unemployment rate was 5.0 percent. (See table A-1.)
Those making forecasts of +100k 200k 300k plus must be surprised and disappointed.
The details:
• November 2009 Payrolls were revised to a gain of 4,000 from a loss of 11,000; October was revised downwards by 15k;
• U3 Unemployment rate held steady at 10%;
• U6 Unemployment ticked up 0.1% to 17.3%;
• Q4 2009 employment losses averaged 69,000 per month; this compares with Q1 job losses of 691,000 a month;
• Temp workers increased 46,500 — the 5th straight monthly gain;
• Total lost jobs lost since the recession began in December 2007 is 7.2 million.
• This is the worst recession in terms of employment and jobs lost, both in actual numbers, and as a percentage of all jobs, of any cycle since World War II was ending in 1944-45.
Gainers and Losers:
Factory payrolls down 27,000
Auto manufacturing and parts industries down 4,900
Construction jobs fell 53,000;
Retail payrolls decreased by 10,200
Service industries (banks, insurance companies, restaurants) subtracted 4,000 workersHealth care employment increased by 22,000.
Financial firms increased payrolls by 4,000
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January 8th, 2010 at 8:38 am
Watching Malpass on CNBC — what a clueless economists — with advice from this hack, its no wonder Bear Stearns collapsed
January 8th, 2010 at 8:47 am
of course, the beauty of 15.3 million unemployed persons being unchanged is that we don’t count them anymore when they drop out of the labor force! 661k dropped out of the labor force, and 589k less people were employed
January 8th, 2010 at 8:50 am
The three /four month trend is up.
Certainly better than YOY.
If you had seen +100k, etc…, markets would have reacted NEG with the fear of Fed tightening rates.
Markets will absorb this data – lagging indicator – and adjust accordingly.
Meanwhile back at the ranch, the Fed will see no reason to hike rates for another quarter or so bringing more sideline cash into equities.
Those institutions with cash have no choice but to enter into equities.
There will be a time to exit this market – it’s not now.
It’s been “The Most Hated Rally” since March. No?
Kindest regards,
Seymour (Ifish) Vonce DeKrauntz
P.S.
I’m looking for Art Cash In’s email – anybody have it?
January 8th, 2010 at 8:53 am
The “upsiders” got some consolation…last month was revised to positive!!! But as BR stated, the headline is nothing more than noise…the unemployment rate is important…U6 ticked up I believe and as KD stated, 661K dropped out of the workforce (that is not noise). What will destroy the economy this year is debt issuance and rollovers, which will lead to higher rates, more foreclosures and defaults.
As for CNBC, I loved this exchange:
Carl Q: Why aren’t people returning to the workforce?
Zandi: There are no jobs.
January 8th, 2010 at 9:02 am
Further CNBC stupidity: They think the silver lining is that U3 stayed flat…but that only happened because 661,000 workers gave up.
January 8th, 2010 at 9:03 am
I still stand by my 85 in oil ticks the top of the market. Also, fwiw, unemployment will probably not good next month also, gubment, state and local are handing out Pinky Tuscaderos, there tax receipts, which they missed for 09, are not projected to get better in 2010, thus, they are at the inflection point of having to do something, and they started evaluating positions in q3 and q4, Eli’s coming.
January 8th, 2010 at 9:11 am
Why can’t I find the birth/death adjustment number this month? Did they move it? How much does that influence the number?
January 8th, 2010 at 9:14 am
A continuation of GAAF (Generally Accepted Accounting Fraud) policies. Someday, it would be interesting to know the real numbers of un- and under-employed (or any goddamned thing else, for that matter). Someday, there’s gonna’ be a backlash.
January 8th, 2010 at 9:16 am
Peter, in Macro Notes, puts B/D at +59K, same as last Dec.
Since small biz probably got mauled (look at household survey), that +59 is likely really -100 or more…so that would make the headline about -250k, or some 400k jobs less than what is needed to meet people entering the workforce.
HORRIBLE!
January 8th, 2010 at 9:24 am
Is CNBC touting next month’s NFP release as the most important in years yet? I bet they won’t, given the massive benchmark revision to the downside coming. That may finally shake people into coherence.
January 8th, 2010 at 9:38 am
[...] Barry Ritholtz: NFP: -85,000 (So Much For that Upside) (The Big Picture) [...]
January 8th, 2010 at 9:38 am
Erin Burnett: Fed printing money to buy Treasuries, isn’t that a Ponzi scheme?
Good job Erin…hey if she realizes this, will the public soon figure it out, or will Erin just be sent to MSNBC?
January 8th, 2010 at 9:48 am
Wow, Robert Barbara taking shots at Bill Gross again. Gross is cool among it all while Barbara getting all in a tizzy again. Really attacking “New Normal” theme. You’d think Gross and Pimco had come up with an absolutley unfathomable theme the way some people attack it.
January 8th, 2010 at 10:07 am
A worse job market is actually GREAT for the money whores on Wall Street. Means more stimulus, QE, TARP, STRAP, HAMP, HARP, FART, SHART and other acronomym-laddled programs to keep the party going for our great whores in finance. Party on whores.
January 8th, 2010 at 10:10 am
Re: people dropping out of the labor force…my question is: who is dropping out?
Is it illegal aliens? Is it high school dropouts who worked in residential construction? Is it people who worked at Countrywide and New Century Financial?
Who expects the bubble jobs to come back? Could we even have sustainable growth if they did?
January 8th, 2010 at 10:11 am
Funny, Manny.
The cleanup of the aftermath of the FART and SHART programs is going to be a nightmare.
All they really need is HEMP.
January 8th, 2010 at 10:14 am
franklin411 Says:
who is dropping out?
The middle class.
January 8th, 2010 at 10:14 am
Manny, my man, you’ve hit the nail excatly on its head!
When will the naysayers begin to realize that the market is a forward looking mechanism tempered by people’s emotions…and not a lagging indicator?
Party on!
Seymour Vonce DeKrauntz, MF; PhF; OBF
January 8th, 2010 at 10:21 am
@ifish: “The market”, as you put it, doesn’t exist anymore. It hasn’t for decades now. This is a sham, my friend. We can either choose to play or not. I’m pretty much “dropping out”, thank you very much. Best of luck to you.
January 8th, 2010 at 10:25 am
Table A, line 4: 843,000 left the civilian labor force. That number keeps going up. Annualize it and ~10M disappear.
January 8th, 2010 at 10:35 am
franklin411:
They don’t count illegal aliens. How can you count jobs which technically don’t exist?
January 8th, 2010 at 10:37 am
@Marcus:
Hogwash. The unemployment rate is lowest for college educated whites (aka the middle class).
January 8th, 2010 at 11:02 am
Two things regarding employment:
-At some point the whole, “hey, it’s great for the market cuz Fed can’t tighten” naivete will fall splat on its face. The Fed will have to tighten at some point whether employment is growing or not. What should be scary for those marketeers is the prospect of the Fed being forced to tighten while the work force is still shedding jobs.
-Regard the “lagging indicator” bullshit, how long is it lagging? At some point the “lagging” is reality. That’s where we’re at now friends.
January 8th, 2010 at 11:09 am
college educated “whites” = the middle class
this kind of elitism is exactly why progressives are abandoning the democratic party (see daily kos, fdl, or huffington post).
January 8th, 2010 at 11:54 am
It is a fact that the the bond market leads the Fed all the time. So this talk about what the Fed is going to do is nonsense – they will follow what the bond market does.
January 8th, 2010 at 1:04 pm
franklin411 Says:
You have a narrow view of what constitutes the middle class. I shouldn’t have expected anything more.
As for your demographic, they’re bleeding like everyone else (recent layoffs at Lockheed/Martin, Pfizer, and Sprint Nextel for example).
Then, there’s this, from the BLS:
Nine major industry sectors reported third quarter program highs in 2009 in
terms of the number of extended mass layoff events in the private nonfarm
sector–construction; wholesale trade; transportation and warehousing; pro-
fessional and technical services; management of companies and enterprises; ad-
ministrative and waste services; educational services; arts, entertainment,
and recreation; and other services, except public administration.
http://www.bls.gov/news.release/mslo.nr0.htm
January 8th, 2010 at 1:04 pm
Did I mention:
Balderdash!
January 8th, 2010 at 1:25 pm
[...] Barry Ritholtz: NFP: -85,000 (So Much For that Upside) (The Big Picture) [...]
January 8th, 2010 at 2:37 pm
The middle class are screwed. We are all Chinese now. But hey it’s not so bad we could all do with a change in attitude. We need to understand some Zen and Confucious principles. And learn to ride bikes. Think of the health savings right there.
January 8th, 2010 at 3:46 pm
More incredible U.S. economic data today.
November wholesale inventories rose a shocking 1.5%. October wholesale inventories were
revised from +.3% to +.6%.
With this new data and the just-reported factory inventory data overall inventories rose .4% in
October and will have risen .6% in November if the still to be reported retail inventories show no
change.
Maybe part of this increase in inventories is due to a rise in prices. Maybe there are some flukey
components to these inventory increases. But even if that is the case these inventory increases
are so large that the odds are that real inventories rose in October and November combined.
What about December? I discussed it yesterday. The non-manufacturing and manufacturing
ISMs for December suggest a large rise in inventories, due in part to a surge in imports.
So on balance the data now suggests that the economy went from huge inventory liquidation in
Q3 at a $139 billion annual rate to outright positive inventory accumulation. Such a swing in
inventories would contribute 4.5 percentage points to Q3 GDP growth or more.
In earlier reports this week I argued 1) strength in the components of real final sales in Q4 is
being greatly overstated due to statistical distortions and 2) viewed from the output side of the
ledger Q4 GDP growth has probably been less than a 3% annual rate. These two theses plus the most recent inventory data suggests that real final sales growth was negative in Q4.
Today’s terrible household employment data supports this conclusion. It points to a contraction in wage and salary income in the fourth quarter. How much of a contraction depends upon how much weight you give to the household survey of employment. I give considerable weight to the household survey of employment. I believe the payroll statistic is biased upward by an extremely faulty birth/death model contribution. This model contributed 59,000 jobs to the December payroll total before seasonal adjustments.
The NFIB issued a report on small business employment conditions yesterday. They remain in
deep recession territory.
January 9th, 2010 at 11:04 am
@Yuan: elitism is saying white=upper class, not middle :)
January 9th, 2010 at 5:09 pm
“Its not all glum — Temp help is improving, and tends to be a good early indicator of more hiring to come…”
Talk of clutching at straws! The whole tone of the report was poor and the total of people out of work, including those who have dropped out and given up, is steadily climbing towards 20 million; we are in a major debt deleveraging downturn (don’t grace it with the word recession) the like of which we have not seen since the time of the Great Depression, and Temp help is suppose to stay a “leading indicator” . Yes, it will lead, all the way through 2010 as employers prefer to take on people temporarily rather than permanently.
If the Health Care bill becomes law you can spell that with a big “T”.
January 9th, 2010 at 5:52 pm
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