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Please Forget About Friday's Jobs Report

The difference between the household survey and the establishment survey were massive - so massive that I do not do not buy into the BLS statements on the distortions caused.

Simply the BLS says that the Establishment survey results may be more accurate than normal (and was NOT effected by the government shutdown), whilst the household survey was effected by the government shutdown.

What is without question is that October was one of the best Octobers ever if one looks at the establishment survey, and one of the worst Octobers ever if one looks at the household survey. Hat tip to Mish for the following:

October BLS Jobs Statistics at a Glance

  • Payrolls +204,000 - Establishment Survey
  • US Employment -735,000 - Household Survey
  • US Unemployment +17,000 - Household Survey
  • Involuntary Part-Time Work +124,000 - Household Survey
  • Voluntary Part-Time Work -181,000 - Household Survey
  • Baseline Unemployment Rate +0.1 to 7.3% - Household Survey
  • U-6 unemployment +0.2 to 13.8% - Household Survey
  • Civilian Labor Force -720,000 - Household Survey
  • Not in Labor Force +932,000 - Household Survey
  • Participation Rate -0.4 at 62.8 - Household Survey

How many believe 735,000 people were not working do to the government shutdown? Realize that there is hocus-pocus in the seasonal adjusting process but 735,000???

Anyway, I would treat this data like a smelly fish - and just pass. Next month we will know whether the data we were served for October was good or bad.

The Econintersect economic forecast for November 2013 again improved . There is no indication the cycle is particularly strong, as our concern remains that consumers are spending a historically high amount of their income, and the rate of gain on the economic elements we watch are not very strong.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

Current ECRI WLI Growth Index

Initial unemployment claims went from 340,000 (reported last week) to 336,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate.

The real gauge - the 4 week moving average - improved from 348,250 (reported last week but revised upward to 357,500) to 348,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line)

Bankruptcies this Week: Privately-held EWGS Intermediary and Edwin Watts Golf Shops, Amarillo Biosciences, Privately-held Atlantic Express Transportation, Privately-held Simply Wheelz (aka Advantage Rent-A-Car)

Data released this week which contained economically intuitive components (forward looking) were:

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Please visit our scorecard to view all the economic data reviewed this week.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.