Non-farm Payrolls

yongestreetmissionThis week’s biggest report was released a few minutes ago.  Here are the summaries from ABC News and the Wall Street Journal.


190K Jobs Lost as Unemployment Rate Rises to 10.2 Percent, Highest Since April 1983 [8:35 a.m. ET]
The U.S. unemployment rate rose by more than expected in October to 10.2%, its highest level in more than 26 years, and employers cut more jobs than forecast. Nonfarm payrolls fell by 190,000 last month, with the largest job losses in construction, manufacturing, and retail trade. Economists had expected a 175,000 decrease.
 Immediate result:  S & P 500 futures are down by 0.60%.

Not surprisingly, the newsies did miss a few bits of critical information in their soundbytes, including at least one good bit. 

To be sure, it was a largely terrible report.

  • Economists expected a loss of (-)175,000; actual loss was (-)190,000; both were an improvement over September’s figures
  • Manufacturing payrolls fell by (-)61,000; economists expected -42,000; previous release was -51,000
  • Average workweek was unchanged at 33.0 hours; economists expected 33.1
  • Hourly earnings, however, rose by 0.3% in October; economists expected +0.1%; previous release was +0.1%
  • Unemployment rate rose to 10.2%

But in the spirit of a Friday, I thought I’d feature some happy news on payrolls.  In September, it was announced that (-)263,000 jobs were lost.  In October, the September figure was revised–as bossman Gary says–”to the good” by 44,000.  So 44,000 of the jobs thought lost in September turn out to be not lost.  (Expect the White House to up its tally of saved jobs by that amount.)  That revision is the best we’ve seen since the economy began–gotta use the most overused term here–hemorraging jobs.  The chart below illustrates this.

The dashed line is the actual release, while the solid blue line is the revised figure, both of which are measured on the left scale.  Notice that the two figures are the same for October, since there has been no revision, yet; that’ll come next month.  The vertical yellow bars show the size of the revision.  Notice that the September revision was the largest of those that have come after the 14 straight months of downward revisions (red box).  Note, too, how the downward revisions scattered over the last few years put chinks in the armor of the economy.

The takeaway from this chart is that revisions are going the right direction.  Jobs are still dropping like flies, but they’re dropping at a slower pace.











Finally, note that while there were upward revisions in 2005-2007, they occured in the context of a downward trend, a trend of lower highs.  In contrast, the upward revisions that have occured this year have been in the context of higher lows.

Oh, and did I not already say this? (lifted directly from a WSJ blog):

Others market watchers wonder about the potential impact of “a 10.2% headline in every newspaper across America. That’s going to impact consumer sentiment, even though we all knew it was going over 10%,” wrote Marc Pado, U.S. market strategist for Cantor Fitzgerald.

 Why, yes I did, just last week.

In September the unemployment rate was 9.8%. It’s estimated to be 9.9% in October. Ask yourself, which does more for you a 10,000 Dow Jones Industrial Average or a 10.000% unemployment rate. While folks likely yawned–as they should have–over an arbitrary index of faulty construction that covers 30 companies–I suspect a double-digit handle on the unemployment rate could rip the chest hairs off of consumer confidence.


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