Something's Fishy About the Jobs Number

Uber Economist Roubini weighs in on the jobs number:

• 110K jobs were created in September and the July and August figures were revised upward. So is it all rosy for the job market? Not really for several reasons
• First, the August revision (+93k) was almost only goverment job which went from -28K to +57K (a +85K revision).
• Second, employment in the private sector was only 73k and this has been its average for the last quarter; this is a weak figure for private sector job creation. 80% of job created in September were either in government or in health/education services.
• Third, since the increase in the labor force is closer to 120k per month this 73k average private jobs for the last 3 months represents a relatively weak job creation
• Fourth, losses are continuing in housing (-20k in September), manufacturing (-18k) and retail trade (-5k), but the housing losses are still mismeasured as many undocumented workers do not show up in the employment statistics.

As I mentioned, strange number. I am not big on conspiracies but really how convenient is it that when the Fed needed a weak number to justify serious cuts, we got it, and then once that was taken care of the reality came to light.

And more interesting is government jobs went from -28K to +57K on the revision or plus 85K. Without that revision last month's number would of been +81K and no need for massive cuts. Sorry it just stinks too much.

Anyhow bigger picture is we continue to move to an economy based on the very bloated healthcare system which is killing in the pocketbooks but its another conundrum - to lower health care costs we need to go electronic and probably eliminate 15-20% jobs in the oversized system, but each year more and more of our economy is devoted to health care jobs - so how do you kill the golden goose? It creates jobs but wacks us all with ridiculous costs. What say you Barry Ritholtz?

• Private sector employment growth was stagnant.
Health care, and bars & restaurants were responsible for more than half the rise.
• Temp jobs, usually a good leading indicator of future job creation, fell 20,000.
• Government was responsible for nearly all of the upward revisions to the July and August
• Manufacturing continues to lose lots of jobs quickly. (Negative 60,000 over the past two months)
• Retail hiring is trending downwards
• To review: Any report under approximately ~150k month (subject to revisions) is weak. It means that job creation is failing to keep up with population growth.
• In 2006 was 226,000 new jobs created per month
• In 2007, that number fell to 122,000
• In Q3 2007, that number fell to 74,000

But Barry - the market likes it, they really like it! All news is good news. Rah rah!To me, what I see is an economy in the long long long run (talking years/decades) that is going to subsist on healthcare and government jobs and apparently bars. Even small government Republicans are creating government jobs like nobody's business, right W? Sounds like a nirvana.If we are just passing along the same dollars from me... to you... back to me... (i.e. I cut your hair, you do her nails, she washes his car, he cuts her lawn), how do we ever create new money/wealth in this country? Oh wait... we have the printing press. I forgot about that. More cuts on the way, more currency floated into the system, making each of our dollars worth less....

Problem solved. Back to the elevator... err... market. Whose going up?My favorite comment in all this is:

The vast majority of yesterday’s revision came in government jobs, with 71,000 jobs in local education being added to the preliminary estimate. It was the first time that nonfarm payrolls were revised from a loss to a gain in the following report since October 2002.

“I can’t explain why it happened; to some extent, it’s just chance,” said Thomas L. Nardone, an economist at the Bureau of Labor Statistics who oversees the jobs report. Mr. Nardone said that early surveys of schools simply did not reflect the actual job growth.

Yes, chance. Imagine that. It's so random. So perfect. So.... something.

Comments

[GreenAB:]

the same came though my mind, when i saw the revised august numbers - excellent write.

it´s the big money that´s running this country...

2007 Oct 09 11:22 AM

[Don Davis:]

With the reported Mortgage and builder layoffs, 140,000+ there is no way the figures are correct. You are sooo right.

2007 Oct 09 12:32 PM

[Afthought:]

The great thing about all the illusionary data which moves markets, is that the game still has to be played with the same players who generate the economic fictions, thus, even though it's all shadow puppets, and smoke and mirrors, stocks go up and they go down; the insiders make the big bucks while rest of us are modern day gleaners.

2007 Oct 09 01:42 PM

[Islander:]

Another laborer in the field of the wicked and powerful. We salute your efforts if not your brains!

2007 Oct 09 05:16 PM

[Will Rahal:]

I do not believe that these data are manipulated. They are simply subject to huge revisions. But I do not think that they are benign.

An average monthly job gain of 110K translates to a 5.3% unemployment a year from now.
I have taken Employment of Goods-Producing relative to Education and Health and this ratio points to a recession. Also Employment of Financial Services relative to Mining and Natural Resource point to a P/E contraction.

2007 Oct 09 05:04 PM

[wunderhof:]

When faced with the choice of attributing some outrageous government action to a cleverly constructed conspiracy or to incompetence, the choice with civil servants is always incompetence. All unelected gov. workers are civil servants, even at the upper levels. Elected officials, on the other hand, are crooks and liars and capable of conspiracies.

2007 Oct 09 06:47 PM