NFP = 18,000

by: Barry Ritholtz

Wow, that's a pretty ugly chart above.

Here are the details, via BLS:

"The unemployment rate rose to 5.0 percent in December, while nonfarm payroll employment was essentially unchanged (+18,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today.

Job growth in several service-providing industries, including professional and technical services, health care, and food services, was largely offset by job losses in construction and manufacturing. Average hourly earnings rose by 7 cents, or 0.4 percent."

So, December NF Payrolls rose much less than expected, up a marginal 18,000 -- or as BLS described it, largely unchanged -- versus a consensus of 70,000. This was the lowest reading since August 2003. Unemployment rate rose to 5.0%, the highest in 26 months.

Construction job losses are now finding their way into the data, regardless of the aforementioned Birth Death adjustment.

The spin coming from the usual sources will be that this poor showing was the result of the August credit crunch, and is therefore likely to be a temporary phenomenon.

I disagree.

These same folks will point to the increasing odds of a 50 bps cut at the January meeting. Those futures have risen to 44% from 36% Thursday.

Unfortunately, the Fed finds itself somewhat hamstrung by elevated inflation, $100 Oil and $850 Gold as signs of inflation.


Coming on top of the slowing Housing market, weak income levels, ISM manufacturing index, and auto sales, this is further evidence to the building thesis that a recession is increasingly likely.


Employment Situation Summary

Fed's Inflation Fears Might Trump
Calls for Another Big Rate Cut Monetary-Policy Makers
Appear to Have Less Room To Maneuver Than in Past

WSJ, January 4, 2008; Page A3

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