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Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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October 06, 2006

Strange Days

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

From MarketWatch:

Growth in U.S. payrolls is lowest in 11 months
Details show September report not as weak as headline suggests
U.S. Economy: Jobless Rate Drops, Matching 5-Year Low

From the Financial Times:

US labour market tighter than estimated

From BusinessWeek Online:

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.

... and to CNNMoney:

"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.)

More details on the employment report are provided by Mr. Naybob, and at Calculated Risk.

"A clean, clear 'signal' from this report is hard to discern," said Richard Iley, economist at BNP Paribas.

October 6, 2006 in Data Releases , Labor Markets | Permalink


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The marketplace obviously had no problem deciding what to make of it.. yields on the Two Year Note are nearly 20 basis points higher than the were just three day's ago..

Whatever the reality, within seconds of the data's release there was massive selling in the fixed income marketplace..

Posted by: sjonas | October 07, 2006 at 12:00 AM

But what does the market know? (Especially those nervous nellies in the front row who would have launched even more impulsively if the report had been more "one handed".)
I was hoping for a considered view/opinion on that annual 810,000 benchmark adjustment and why, seeing how it was a collection from various businesses, it was not broken down any further than that one blobby number.
Ace construction may have more than construction employees I suppose and to just count these labor adjustments as 'carpenters' would be hasty. And not reviseable like the hasty-proof monthly tallies.

Posted by: calmo | October 07, 2006 at 12:51 AM

I'm confused that you think anyone, aside from market PLAYERS, would care about "what to make of the employment report". Employment is at 4.6%! I hope what EVERYONE does care about is whether BB still believes fundamentals were behind the astronomical housing price increases of the last 4 years. This question has monumental significance because it implies what the Fed's likely to do when prices fsll & the economy follows.
I haven't read any data supported argument attesting to BB's claim of a year ago & the ONLY purpose I can come up with as to why he'd say such a thing is for setting up an "easing" policy down the road. The problem is, I believe he said it BEFORE he became Fed Head.

Posted by: bailey | October 07, 2006 at 06:53 PM

Confusion, what confusion?
October 6 – EconoPlay.com (Gary Rosenberger): “... The big story for the second consecutive month was the import swell at the nation’s two largest container ports, Los Angeles and Long Beach, where combined imports rose 16% year-over-year – well above the steady 10% to 12% increases seen from January through July. ‘These are monster numbers no matter how you cut them – it was our highest inbound total ever and the highest total ever,’ said Art Wong, spokesman for the Port of Long Beach.”
What's the problem people? Didn't you learn anything from AG? Get on the train, "fundamentals" are fine: No inflation, ridiculously low unemployment, productivity's still looks good; heck, the economy's not fine, it's GREAT! Look out to the horizon, can't you see DOW 50,000 straight ahead? There's no down side, worst case, the Fed will NOT let us fall into a recession, that would be unthinkable.
Just keep that credit flowing, Ben!

Posted by: bailey | October 08, 2006 at 09:17 AM

So, the stock market set new highs. Now it will trade lower on technicals. A little consolidation, then it will be of to the races. Dow, and other indicies will set new highs by the end of December. (Providing no change in the political climate, if the tax and spend Dems get in and replace the spend and spend Reps, all bets are off)

Posted by: jeff | October 08, 2006 at 07:20 PM

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