Friday, November 4, 2011

Jobs report modestly positive

Although the change in private payrolls was less than expected (104K vs. 125K), upward revisions to recent months were unusually large, with the result that, according to the establishment survey, there are 188,000 more private sector jobs today than we thought there were last month. Moreover, the household survey turned up a gain of 346,000 jobs in October.

To smooth out the normal monthly volatility in all these series, it usually helps to look at what is happening over the last six months. As the chart above shows, both the establishment and the household surveys now agree that the economy has added private sector jobs at the annualized rate of 1.4%. That works out to an average of 120K new private sector jobs per month. All that does, however, is keep the unemployment rate from rising, since the labor force tends to grow about 1% per year on average, thus adding about 120K job seekers to the mix every month.

This report also showed that the decline in public sector jobs, which began almost three years ago, is still ongoing. From a macro perspective, that's a good thing, since it addresses one of our biggest problems: public sector bloat (which we share with many European countries, unfortunately). This had better continue, though, since the public sector workforce is still 1.5 million larger today than it was in early 2000 (for a gain of almost 7%). The private sector workforce, however, is still 0.6 million smaller (for a loss of 0.6%).

Overall, I would call the October jobs report modestly positive, especially since it soundly refutes the notion that the economy is struggling and on the verge of another recession. Instead, it clearly shows that the economy continues to grow, albeit at a frustratingly slow pace.


McKibbinUSA said...

I concur that the jobs report for October was modestly postive -- the US employment to population ratio edged up on both a monthly and annual basis as well -- more at:

However, all eyes are now on Greece, leading to Italy, Spain, and Portugal -- I am also increasingly alarmed at the default unfolding before our eyes in California -- my own conclusion is that these defaults will have little impact on small investors such as myself -- still, insurance companies and pension funds could be wiped out by sovereign defaults -- in the end, a fire sale by insurance and pension funds may only improve the buying opportunties for we mortals -- the bubble at the "too large to fail" firms and nationstates is about to blow...

Anonymous said...

It's interesting that the household survey has consistently shown greater job growth since about 2002 than has the establishment survey, whereas before that the reverse was true. More people self-employed, perhaps? Or is the BLS far behind on capturing new firms?

Bill said...


Seems TrimTabs was too high. Perhaps revisions to the BLS will prove them right.

Anonymous said...

Yes, I noticed that. Let's see what the revisions say.

Also, since the BLS and TrimTabs use entirely different methods, it's probably better to compare the two via 3-month rolling averages, or some similar means. For example, the 2-week Verizon strike isn't going to show up much in withholding tax receipts and so it won't have much effect on TrimTabs' results, but it did have a big effect in both August and September BLS results. So, looking at a rolling average will probably be a better comparison.

Benjamin Cole said...

Feeble and weak growth---a failure on the part of the Fed, a failure.

Chris said...

Hi Scott, I'm an advisor and I've got to say your blog is such a welcome, refreshing change from all the political posturing and half truths masquerading as news out there. Thank you so much - you are a great resource.

And also as a holder of a Master's degree in Music and 15 years as a professional classical musician, I'd like to say that your niece's song is very charming, very endearing.

All the best to you and your family.


Scott Grannis said...

Chris: Kina and I both thank you!

Junkyard_hawg1985 said...

The market seems disappointed in today's unemployment numbers. When I look at the numbers, I see some of the best job growth we have seen in a while (and I tend to be a naysayer). Based on the household survey, here are the seasonally adjusted number of people employed nationwide:

July: 139,296,000
August: 139,627,000
September: 140,025,000
October: 140,302,000

This is over 1 million jobs added in the last three months. I trust the household survey more than the business survey as there are far fewer assumptions (business birth death model, later adjustments, etc). It seems to me that the business survey tends to get revised to be more like the household survey.

John said...

"All eyes are now on Greece"

What's going on back here in the U.S. with the Super Committee?

Given their task, things seem strangely quiet.