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The Atlanta Fed's macroblog provides commentary on economic topics including monetary policy, macroeconomic developments, financial issues and Southeast regional trends.

Authors for macroblog are Dave Altig and other Atlanta Fed economists.


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October 07, 2005


Noise?

That seems to be what everyone expected from today's release of the September employment report. Calculated Risk points out that collecting this month's data required a few creative adjustments to the usual process, but there was no shortage of commentary ready to declare the report as pretty good news. From MarketWatch:

Hurricane Katrina blew away a quarter of a million jobs, but outside of the battered Gulf Coast, job growth remained healthy in September, government data released Friday show...

U.S. nonfarm payrolls fell by an estimated 35,000 in September, the first decline in more than two years, the Labor Department said Friday.

The unemployment rate rose as expected to 5.1% in September from 4.9%, as 270,000 Americans joined the ranks of the jobless.

The decline in payrolls was much less than the 150,000 drop expected by Wall Street economists surveyed by MarketWatch...

The Commentary in the blogoshpere has thus far been more skeptical.  Barry Ritholtz says we should just consider this report a mulligan, Calculated Risk asserts that it will probably be months before we get the true picture, and pgl at Angry Bear just hopes there is nothing ugly hidden among the data uncertainty.  All of that seems hard to argue with.  Nonetheless, one of the things that got my attention was this (again from the MarketWatch article):

In addition to the better-than-expected September results, payrolls in July and August were revised higher by a total of 77,000 jobs. Job growth has averaged 194,000 per month over the past year.

To me, that is starting to look like pretty healthy net job creation.  And I don't quite agree with this statement from Calculated Risk:

The jobs report can be summarized: Construction hot, manufacturing not, Katrina impact unclear. As is usual, construction added jobs while the downward trend in manufacturing continued. In fact, manufacturing jobs (14.234 million) are at the lowest level since 1950.

Not that the statement is wrong.  It's just incomplete.  While it is true that manufacturing job growth is virtually nonexistent, that is nothing new.  And while job gains were had in construction -- as has been the case for awhile -- outside of retail sales advances in employment were broad-based.  Here is the detailed story in pictures:

Manufacturing lost 27,000 jobs...

Manufacturing
... and retail a whopping-looking 88,000 jobs:

Retail_trade
That looks to me like the real news of this report, as growth in most other industry categories held pretty close to recent form.  Construction gained 23,000 jobs...

Construction

... but in addition we added 11.000 in the financial activities sector...

Financial_activities
...  52,000 in the business and professional services area...

Professional_and_business_services
... 49,000 in education and health services...

Education_and_health_services
... while the government kicked in another 31,000:

Government

Overall, that is not a bad set of pictures.

UPDATE: More, from the Skeptical Speculator.

October 7, 2005 in Katrina, Labor Markets | Permalink

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Listed below are links to blogs that reference Noise?:

» Macro effects of oil shocks-- what should we be looking for next? from Econbrowser
I recently prepared an entry on the macroeconomic effects of oil shocks for the new edition of the Palgrave Dictionary of Economics. Here I sketch some of the material from that essa... [Read More]

Tracked on Oct 9, 2005 10:52:52 PM

Comments

Wow. Teachers went back to work in September, huh?

Who would've thought it.

Posted by: donna | October 08, 2005 at 01:41 AM

Fair enough. I was being glib, but I did write this was a "relatively strong report" - and it was. I also added a link to your post.

Best Regards!

Posted by: CalculatedRisk | October 08, 2005 at 03:04 AM

donna -- I posted the seasonally adjusted statistics, so the return-to-school effect should be controlled for.

CR - Thanks. It was only a small quibble.

Posted by: Dave Altig | October 08, 2005 at 08:14 AM

David,

I agree that the picture "as painted" looks decent, but much like the CPI, I have some pecadillo's with Non Farms.

Bare in mind that BLS uses a method to calculate "phantom" jobs that they "think should be created". This is akin to hedonic adjustments.

Then they go back periodically and revise the figures to reflect reality.

I have examined the BLS statistics from Jan 01 through Jun 05 and there are some startling findings.

If you throw out the first six months of hypothetical job creation this year which will be revised at a future date:

Total non farm payrolls Jan 2001 130.433 million - Jan 2005 130.495 million.

This yields exactly 62,000 new jobs, for a whopping 1,291 jobs created monthly over the 4 year period.

Unemployed persons Jan 2001 - 6.017 million, Jan 2005 - 7.737 million, for an INCREASE of 1.720 million unemployed persons over the 4 year period.

1.720 million newly unemployed vs 62,000 new jobs over 4 years. Thats what I call getting JOBBED.

That is a really pretty picture, as in pretty grim.

http://naybob.blogspot.com/2005/09/bls-non-farms-job-creation-2001-to.html

Posted by: The Nattering Naybob | October 10, 2005 at 12:45 PM

How MNC’s work in China:

“To this end, multinationals often first establish a holding company to reorganize existing assets or expand investment. Then the holding companies streamline subsidiaries to reduce material procurement and distribution costs.

“To further reduce costs, the multinationals also require their component suppliers to move to China to form a complete supply chain, which makes products more price-competitive.

“The auto industry is a telling example. By last May, the more than 50 core component providers for Japanese car maker Honda had opened or planned to open branches in Guangzhou, where Honda has its key manufacturing base in China. “

This is not a trickle of jobs; these are entire chains of production.

http://www.chinadaily.com.cn/english/doc/2005-10/11/content_483915.htm

The good news is: Great jobs in finance, health, government, and...oh yes, building houses.

Yup. We are doing fine on on choice of work.

Cheers.


Posted by: Stormy | October 11, 2005 at 10:57 PM

How MNC’s work in China:

“To this end, multinationals often first establish a holding company to reorganize existing assets or expand investment. Then the holding companies streamline subsidiaries to reduce material procurement and distribution costs.

“To further reduce costs, the multinationals also require their component suppliers to move to China to form a complete supply chain, which makes products more price-competitive.

“The auto industry is a telling example. By last May, the more than 50 core component providers for Japanese car maker Honda had opened or planned to open branches in Guangzhou, where Honda has its key manufacturing base in China. “

This is not a trickle of jobs; these are entire chains of production.

http://www.chinadaily.com.cn/english/doc/2005-10/11/content_483915.htm

The good news is: Great jobs in finance, health, government, and...oh yes, building houses.

Yup. We are doing fine on our choice of work.

Cheers.


Posted by: Stormy | October 11, 2005 at 10:57 PM

Well,
After creating a havoc in the US katrina is now showing its effect on India. The effect here is of a different kind and is happening because of change in US Govt's economic policies. Read more: http://www.easternbrain.com/2005/10/18/us%e2%80%99s-katrina-may-affect-india/

Vishnu

Posted by: Vishnu | October 19, 2005 at 04:36 PM

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