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October 06, 2006
What to make of the September employment report? On the one hand you have September employment growth checking in at a measly 51,000 jobs. On the other hand you have the news that
75,000 60,000 more jobs were created in August than previously thought. Let's see. Is the labor market glass half-empty or half-full? The headline writers, at least, seem to be in a half-full kind of mood. From Reuters:
U.S. jobs picture stronger with expected revisions
Details show September report not as weak as headline suggests
U.S. Economy: Jobless Rate Drops, Matching 5-Year Low
US labour market tighter than estimated
Meager job growth in September sends a clear signal of a slowing economy, right? It ain't necessarily so
In fact, the revisions in August do imply that, even with the weak-looking September performance, so far this year businesses are adding to payrolls at a pace of 137,000 new jobs per month:
It is true that the soft job performance in September was spread across the broad sectors of the economy. But then again, so were the upward revisions in August:
It in fact revisions in what we thought was history was the theme of the day. From the aforementioned Reuters post:
Conclusions? Let's turn back to MarketWatch...
John Silvia, chief economist with Wachovia, said the report raises more questions than it answers, which can pose problems for markets.
"Is September the aberration, or is September the month we fell off the cliff?" he asked. "I hate to say, but we really don't know until we see the next report."
Preliminary tabulations of employment from state unemployment insurance tax reports show the estimate for total nonfarm payroll employment in March 2006 will require an upward revision of approximately 810,000, or six-tenths of one percent, said Philip Rones, acting commissioner of the Bureau of Labor Statistics.
That means for the 12 months up to March 2006, there likely were more workers on the payrolls than first counted.
This will be the biggest benchmark revision since the department began making them in 1991, and officials at the BLS, the Labor Department's statistical arm, said they are still researching the discrepancy from earlier estimates.
Or maybe even beyond.
BLOGWORLD UPDATE: Claus Vistesen calls the employment gain "measly." The Capital Spectator prefers "meager." Daniel Gross suggests "lame". Nouriel Roubini claims he was overoptimistic! The Skepitcal Speculator leaves it at "awfully low."
Russell Roberts ponders the revisions in recent job growth estimates and wonders if those who have been stressing that the household survey might just be right. (For some time the household survey has been suggesting a lot more job growth than the payroll survey, which generates the statistics that most economists and press reports stress.) pgl, however, is skeptical (to say the least). And Tim Iacono likens the revisions to "kissing your sister." King at SCSU scholars is skepitcal too (hat tip, William Polley).
Dean Baker notes, along with Arnold Kling, that the upward revision in past employment growth means that estimated productivity growth is correspondingly lower than we thought. Felix Salmon reminds us that there are more revisions to come.
Michael Mandel again emphasizes job growth in health-care sector (and again makes what I think is a misleading comparison by lumping all non-health-care private jobs together.)
"A clean, clear 'signal' from this report is hard to discern," said Richard Iley, economist at BNP Paribas.
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