The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

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

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December 08, 2006

Another Good Employment Report -- And Why Some Will Argue It Might Not Mean Much

First the basics, from BusinessWeek.com:

U.S. nonfarm payrolls rose 132,000 in November, beating the forecast for a 110,000 gain. October's payrolls were revised down to 79,000 from 92,000, but September's 148,000 level was revised up to 203,000, for an overall net upward revision of 42,000.

The details have a familiar ring, with construction and manufacturing employment continuing to take it on the chin, and broad-based gains elsewhere -- even in retail:




So what's not to like?  Only the hunch that it might not last.  From the Wall Street Journal (subscription required):

The labor market remained quite tight in November. However, labor market tightness is at best a coincident indicator and more generally a lagging indicator of economic strength, so changes in joblessness will not drive Fed policy.... -- Steven A. Wood, Insight Economics

Indeed, today's report on consumer confidence from the University of Michigan suggested that, though folks may be thinking things are OK at the moment, the perception out there is that the future might not be so bright.  From Reuters:

U.S. consumer sentiment ebbed in December as consumers pared back their view of their future financial conditions, raising concerns on the outlook for spending...

The survey's index of current conditions rose to 108.2 in December from 106.0 in November, while consumer expectations dipped to 78.6 from 83.2 in November.

There has been a lot of talk lately about the similarities between 2000 and today, the idea being that this year's housing bust is eerily reminiscent of yesteryear's stock market crumble.  Those comparisons are fair enough, but it is useful to remember that by end of year 2000 weakness in the labor market was already manifest: 




I'd say we're still ahead of the game.

December 8, 2006 in Data Releases , Labor Markets | Permalink


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James agrees with you and I'm mixed about James, that agreement and now, you.
Of course, this is hardly anything like a leading indicator and possibly nothing more than an up-to-the-minute and 'final' psychological report.
The BLS adjustments recommend we suspend judgement until 'final' reports are in, I think is the message here and now (but possibly less self-extinguishing later when revisions are modest).
A couple of things that seem odd/misleading: with the housing market showing substantial declines, labor esp real estate do not reflect this level of decline --leading some to believe that being employed as a RE agent is not verifiable in the same way that say a baker is. The local baker can only fib about this for so long, while the local RE agent can keep up the pretenses for much longer, due in part to his vastly superior skills, dedication, but also to his slightly better compensation that allows him to continue selling as little as only a couple of loaves a year.
It is easy to think that those declining manufacturing/construction jobs are just transfering to services avoiding that 'job-dislocation', with no real employment loss as the BLS illustrates, but this would be hastey IMO.

Posted by: calmo | December 09, 2006 at 12:55 PM

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