So were the jobs numbers mediocre?

I’ve been out all morning, but here are my thoughts on today’s employment report.

Before the numbers came out, I said I was looking for a mediocre report because that is the sort of not too hot, not too cold kind of report which won’t force the Fed’s hand.  By in large, I think that is what we got.

First of all, I’m not really stressed about the census workers issue. A lot of people have been subtracting them to get to the underlying trend of job growth.  That exercise is fraught with peril. It may give you a read on where job growth is trending. However, it may mislead us because census jobs add income to the economy right now and that’s what is needed. Ultimately, what is important right now is that we see enough of a kick on employment in order to maintain cyclical factors like inventory builds which will overcome the threat of a double dip. So, when I see non-farm payrolls at +162,000. My initial reaction is positive.

Goldman is out with a note saying that the +162,000 was due mainly to the hiring of temporary census workers (48,000) and an improvement in weather. We’ll see next month if that is indeed true. However, Goldman had an aggressively high +275,000 NFP number before the ADP dashed their hopes. Even after Wednesday’s disappointing ADP report,  Goldman was expecting a 200K print. So, their analysis does indicate that this was not a robust number despite the headline.

One positive data point was the increase in weekly hours worked, something that presages more hiring. Two negative data points: the underemployment rate (U-6) moved higher to 16.9% and average hourly earnings fell. As I have been saying, unless people are making more money, any increase in consumption is unsustainable except through the accumulation of debt.

Bottom line: this jobs report was mediocre. the headline number is the kind of thing you like to see and supports increased consumption over the short-term.  However, the details were a bit murky and that means the Federal Reserve is off the hook; easy money rates will continue for now. Net-net, this is about as good as it’s going to get right now.

  1. Daniel says

    I’ve got a question and I haven’t yet found a sufficient answer in the internet (main problem: I don’t know what keywords I have to use for search and answers from other boards like zerohedge were conflicting). This question already bothers me for some time, so I would be pleased if you could give me a short answer.
    Do the USA have a basic social net like in europe or are you finally on your own? I’m asking me this because I’d like to know what happens to people whose unemployment benefits have run out. I know that there are food stamps, but does the government also pay for a flat or do you finally end up in your car or even worse? I’ve read irritating postings about surging numbers of homeless people in public libraries… And if that’s true, where do these people stay at night?

    When your unemployment benefits in germany run out (after 12 month), you are transfered into another program called unemployed benefits II. Unemployment benefits II are unlimited but very low, the government pays for a (appropriate) flat and you get 360 € per month for living (as a single person). You just have to prove that you are poor, jobless and actively looking for any kinds of jobs. Is there something similar in the USA or do you finally end up under the bridge?

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