The usual suspects will be in the full throes of the employment situation report/data dump — the most important report of the month! — or, as I prefer to call it, Friday.

The clock in the corner of the TV screen will tick down, someone will breathlessly read the headline Unemployment Number and NFP info, @TheStalwart will tweet it, and then . . .  Nothing will happen.

Let’s put this into some context: Under normal circumstances, any given NFP number matters very little. The net change in people leaving and starting jobs in any month is tiny — a few 100,000 people out of 150 million or so in the labor pool. It is not a significant number relative to the overall economy.

What does matter is the overall trend — is the economy gaining jobs consistently month-after-month? Is it losing jobs? Are those losses accelerating? What about wages? Temp help? Hours worked? These factors can all be looked at as part of the longer term trends to determine the overall health of the labor market.

Over the past few years, the trend has been a soft improvement. Unemployment has gradually come down from 10% to 8%; year over year gains in people working has been under 2%. So the employment situation is improving, but rather slowly.

This is even more stark when compared to pre-2001 recoveries, which only serves to emphasize that the post-credit crisis recovery is very different than the ordinary recession recovery.

Which brings us to today’s number. There are both upside and downside risks to the consensus number, something that theoretically is the case each month, but seems especially potentially random for November 2012. The consensus estimates of economists surveyed by Bloomberg are for a Non-farm payrolls rise of 85,000 workers (versus 171,000 in October) and a steady 7.9%  jobless rate.

The downside surprise is the possibility that hurricane Sandy significantly reduced not only jobs, but the BLS’ ability to actually track and assemble all of the data that goers into making each month’s NFP.

The upside surprise is based on a few factors, such as strong withholding tax data, or the potential for a continuation of the decent 170k from October.

My guess? I have no opinion . . .

Employment situation report released at 8:30am



Category: Employment, Financial Press

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.

10 Responses to “How Meaningless Will November NFP Be?”

  1. [...] Also, here's Barry on why the month-to-month number doesn't matter. [...]

  2. stonedwino says:

    Meaningless? Not! 146,000 jobs created in November, even with Sandy getting in the way. If my business is any barometer, the economy is on the mend indeed, as November turned out to be our best month since 2009. If we can keep this going, it would be good for all, including several new employees I’ve hired this year.

  3. VennData says:

    U.S. Adds 146,000 Jobs; Jobless Rate Falls to 7.7%

    Meaningless is the right word for these Chicago-generated “statistics.”

    – Jack Welch

  4. Northeaster says:

    I’m thinking the NFP is noise as well:

    People not working and not paying taxes with population growth might be a problem no?

  5. louiswi says:

    A wise man once said: “keep your eye on the doughnut, not the hole”. 92% of us are working , spending money, generating 14 trillion in GDP, and enjoying life.

  6. brianinla says:

    Labor participation rate is 63%, not 92% louis. Put down the doughnut and work on reading comprehension.

  7. DeDude says:

    The unemployment rate is being helped by a slow but steady recovery in the underlying economy (housing etc.) and the natural (and forced) retirement of the baby-boomers. The number each month is meaningless, look for the medium term trend.

  8. Lukey says:

    And 350,000 more people dropped out of the labor force. I’m seeing reports that something like 73% of the jobs added in the past five months were government employees. If baby boomers retiring is a good thing for the US economy, why aren’t they being replaced by any of the legions of young college grads living in their parents’ basements? Yes, the economy is getting better, slowly. But is that what we should expect after the trillions in “stimulus” the Feds have printed/spent over the past four years? Or is that a “hair on fire” WTF is wrong here deal?

  9. [...] morning, I mentioned how little I care about the discrete monthly NFP data each month, saying the “overall trend” was what mattered. [...]

  10. DeDude says:


    Where on earth did you get the idea that “73% of the jobs added in the past 5 months” were government employees? I guess you got them from some of these right wing bloggers who freely cherry-pick narrow ranges and mix seasonally adjusted with unadjusted numbers as long (anything goes as long as it produce the right conclusion).

    Governments have been cutting jobs since the beginning of this recession and only recently have those cuts stopped. When look at one of these right wing sites, with this moronic claim, it actually gives a link to the BLS report If you look at the last page of that report there is absolutely nothing to support the claim of 621,000 jobs added to government, it is 618,000 jobs LOST since the peak government employment in August 2008. But I guess that was OK because few of the people reading that blog will care to check the information in the link, why bother when it supports what they already know to be true.

    It is amazing how alternative realities can develop, even supposedly based on the same data.