Total nonfarm payroll employment rose by 166,000 in October to 138.4 million, following increases of 93,000 in August and 96,000 in September. In October, job growth continued in several service-providing industries, while employment in manufacturing continued to trend downward. Construction employment was little changed over the month.
Let's go back to the latest GDP report which had growth at 3.9% with an unbelievably low inflation level (.8%). Now, lets' approach the employment report from two angles.
1.) Let's assume the GDP report was correct and the inflation number was accurate. Then this number makes sense. With an economy growing at 3.9% you're going to see more job growth. It's that simple.
2.) Let's assume the GDP report was too high, largely because the inflation number was too low. Then this report is bit harder to swallow but it doesn't strain credulity. Let's assume that inflation is restated and takes the GDP report down to 2.5% -- which is a pretty large whack. Even at 2.6%, 166,000 isn't that hard to believe. While 2.5% isn't great, it's still growth and that means businesses will need more people to do stuff. In addition, employment figures have been low for the last three months indicating businesses may have been holding off on hiring and now have to hire because they have their "backs to the wall" as it were.
In short, given the latest GDP number this report isn't out of line with the current environment.
5 comments:
Gimme a break on GDP #, that deflator number defies reality. It's the LOWEST accounting for inflation since when the 50s-60s. Oil in 90s, food up 8-10%, oil in 90s. WHY IS ANYONE BELIEVING THIS SH@T??
The employment numbers - not believable. Come on the mortgage industry has been destroyed and yet net increase in finance jobs.
The plunge into a third world economy continues unabated. The bulk of the new jobs supposedly created exist in the "Leisure and Hospitality" (56K) and "Health Care and Social Assistance" (35.1K) and "Employment Services" (33.5K) categories. Throw in another 34.6K associated with "Local Government, Education" and one gets the impression that the tweaks they applied to the birth-death model for the summer weren't pulled out in time.
Incidentally, take a look at the "Transportation and Warehousing" category. "Truck transportation" was down 6.6K, essentially eliminating any other growth in the overall category. This certainly doesn't represent an economy which is moving anything around. Even the "Information>Telecommuncations" category was negative for the month. Next month's "adjustments" will be interesting to see.
I'm with Anon, here. Yes, it looks good, but something just doesn't sit well with ANY of these numbers. I can't find anyone who disagrees with the job numbers---and gains in the finance industry? are they being fired then rehired under the incorporation of a new company or something?
BondDad:
Just got this from the NYTimes:
"Adding to the uncertainty about the report, most of the job gain — 103,000 of the 166,000 net new jobs — came from an estimate that the Labor Department makes each month about how many jobs were added by new businesses. The Labor Department did not actually find evidence of these jobs; it assumed they were created based on historical patterns.
In October, for instance, it assumed that new businesses in the construction sector added 14,000 jobs and new financial services businesses added 25,000. Given the weakness in these sectors right now, it is possible that these numbers will be revised down later."
I think we can safely assume that this 166,000 number falls squarely within the realm of quantum bogosity.
Ah Bonddad, comments like the one above on the "job creation" number by BlueState are why I read your blog, and your commenters. I have a feeling that the economic numbers I hear from the mainstream are BS, but you folks give me specifics to support my suspicion.
Post a Comment