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Goldman On The NFP Number - "Little Underlying Improvement...Productivity Gains Have Diminished Sharply"

Tyler Durden's picture





 

USA: Non-Farm Payroll Employment - March Shows Little Underlying Improvement But Other Data Firm

Actual: +162,000 mom
Previous: -14,000 mom
Consensus: +184,000
Released: Friday, April 02, 2010 at 08:30 (New York time)

March Shows Little Underlying Improvement But Other Data Firm
BOTTOM LINE: In a report with something for everyone, payrolls bounce 162,000 in March, due mainly if not entirely to census hiring and weather rebound. On the positive side, payroll data for prior months revised up, and survey of households shows third consecutive month of large job gains. On the negative side, measures of labor utilization - the official unemployment rate as well as the broader "U6" underemployment rate - remain high, and wages suffer a setback.

KEY NUMBERS:
Nonfarm payrolls +162k in Mar vs. GS +200k, median forecast +184k.
Unemployment rate 9.7% in Mar vs. GS 9.6%, median forecast 9.7%.
Average hourly earnings -0.1% in Mar (mom, +1.8% yoy) vs. GS +0.1%, median forecast +0.2%.

MAIN POINTS:
1. The 162k increase in nonfarm payrolls reported for March looks like it is mainly due to the hiring of temporary workers for the census (+48k) and weather effects. While the latter can only be estimated, our +100k figure looks right if not a bit low based on three observations: (a) an increase in construction payrolls (+15k vs declines of 60k in Jan and 59k in Feb), (b) a full recovery from Feb setbacks in workweeks, and (c) a sharp swing down in the number of people reporting themselves as out of work due to weather (to 135k in Mar from 1.03 million in Feb, which statistically would be consistent with a weather effect of more than 100k).

2. Two other aspects of this report are firmer. First, payroll figures for Jan and Feb were revised up, by a cumulative 62k. Second, the survey of households reported a third consecutive large increase in employment, of 264k (cumulative increase now 1.1 million). It is not unusual for the household survey to show firmer recovery in the early stages of an economic recovery as net business formation picks up more rapidly than the payroll figures may anticipate.

3. Despite the firmer tone of the household survey, the unemployment rate remained at 9.7%, as labor force participation edged up for a second consecutive month. In fact, on an unrounded basis the unemployment rate came just short of rising 0.1 (9.749%). Meanwhile, the broadest "U6" measure of underemployment edged up 0.1 point, to 16.9%, underscoring the fact that there is still quite a bit of unused capacity in the labor market, both in terms of people who are working part time because they cannot find full-time work and in those who have not reentered the labor force. Consistent with this, average hourly earnings continue to weaken, slipping 0.1% on the month and dragging the year-to-year trend down to 1.8% (despite a small upward revision to the prior month).

4. With the recovery of workweeks in March, the index of total hours worked rose 0.4%. For the quarter as a whole, hours worked were up 2.1% at an annual rate. With the "bean count" for real GDP still fairly consistent with our estimate of a 2.5% annualized increase, the implication is that productivity gains have diminished sharply.

 


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Fri, 04/02/2010 - 09:53 | Link to Comment Hephasteus
Hephasteus's picture

Woo good jobs report. I'm glad the banks have the ability to track all the money and know who's getting  a paychec cause they are so honest.

Fri, 04/02/2010 - 09:53 | Link to Comment Missing_Link
Missing_Link's picture

Anyone want to take a guess as to whether Goldman is using double-reverse, triple-reverse, or quadruple-reverse psychology with this one?

Fri, 04/02/2010 - 11:03 | Link to Comment tenaciousj
tenaciousj's picture

I got lost somewhere between the 5th and 6th head fake to the left (or was it right) after the double-spin.

Fri, 04/02/2010 - 11:43 | Link to Comment BlackBeard
BlackBeard's picture

bottom line: they want rates to stay low.

Fri, 04/02/2010 - 12:51 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"March Shows Little Underlying Improvement But Other Data Firm"

Translation - The corpse is cold but the artificially enhanced breasts are still firm. 

Sat, 04/03/2010 - 12:11 | Link to Comment Igor AKA 990
Igor AKA 990's picture

Ive been suspect of that all along.  I have a feeling they are crushing it in the EUR/USD. 

they are just double talking...

the house always wins

Fri, 04/02/2010 - 09:58 | Link to Comment sweet ebony diamond
sweet ebony diamond's picture

give this goldman guy a big fucking bonus.

i like his attitude.

Fri, 04/02/2010 - 10:11 | Link to Comment Cookie
Cookie's picture

Comment from the Fed?? Aren't they responsible for US (un)employment??

Fri, 04/02/2010 - 10:14 | Link to Comment AccreditedEYE
AccreditedEYE's picture

I'm sure we'll be up 1000 points on Monday. Does data really mean anything anymore?

Fri, 04/02/2010 - 10:21 | Link to Comment Cursive
Cursive's picture

I'm not so sure.  It's a long weekend.  A lot can happen.  Then again, a gap and crap would be awesome.

Fri, 04/02/2010 - 10:30 | Link to Comment aint no fortuna...
aint no fortunate son's picture

Stock futures have been rallying since the release with DJIA up 35, NAZ up 9.5, despite the dollar being up sharply also. This is pig heaven for Bernanke... he's got the guys at 133 Liberty gunning futures while everybody else is home drinking coffee (or whatever). Must be great to have a monopoly where those damn equity traders can't even place a trade.. maybe he can get Obama to shut down the cash markets permanently... then we'd see DJIA 36,000 pretty damn quick!

Fri, 04/02/2010 - 10:17 | Link to Comment Bob
Bob's picture

"March Shows Little Underlying Improvement But Other Data Firm"

WTF is the significance of "Other Data" and what might that data be?  Equities relentlessly gunned by the PTP? 

Titanic crew: "Captain, the water cotinues to pour over the bulkheads, but the band is still playing and deck chairs remain securely in place."

Love Goldman's tone of "responsibly cautious" optimism here.  Extend and pretend. 

What a crock.  Official average hourly earnings for those still working down 1.8% YoY. 

Fri, 04/02/2010 - 10:20 | Link to Comment Monoki
Monoki's picture

So job growth is still sluggish.  And now Goldman thinks that productivity is diminishing.  Meanwhile, the Squid just notched down Q1 EPS estimates on banks.

Next up with be Goldman taking down its ridiculous 2010 EPS estimate on the S&P 500 of $78, or a 33% increase, to something more doable...say $70.  And $70 multiplied by a historical forward P/E ratio of 16 is 1120.

But we're still going to 1300, right AJC?

Fri, 04/02/2010 - 11:00 | Link to Comment Hephasteus
Hephasteus's picture

No it's hiding behind servants. Goldman and all the top people are trying to portrait a bad scenario while they get their servants to pump sunshine up everyone ass trying to make the sunshine appear to be a rebellion against the horrible goldman reality and that they are being outcreated.

They'll try to pull in new unknown people to be part of the sunshine under some sort of guise that they are relenting to other powers. I betya april is full of unknown faces and new voices on the CNBC.

Fri, 04/02/2010 - 10:24 | Link to Comment DavidC
DavidC's picture

Yup, average working hours up slightly, average hourly pay DOWN slightly.

Off-the back-end-of-the-unemployed-because-they've-been-unemployed-so-long, UP 3.2% to 44.1%.

All good for the stock markets...isn't it?

DavidC

Fri, 04/02/2010 - 10:55 | Link to Comment AccreditedEYE
AccreditedEYE's picture

I don't mean to be too "conspiracy minded" here..(is that possible on ZH? :)  ) but don't they HAVE to eventually bring the market down big to defend ZIRP? Won't the inflation hawks get nuts watching equity and commodity markets keep breaking out? If the Squid keeps equities headed for DOW 36,000 how in the hell do you defend ZIRP?

Fri, 04/02/2010 - 10:59 | Link to Comment SteveNYC
SteveNYC's picture

Productivity was never really there. The average US worker bee is not productive, and the workplace is a haven for narcissists making their massive weaknesses appear as strengths to the unobservant.

Squeezing additional hours out of unproductive worker bees is not a healthy way to pull an economy forward.

Good luck all!

Fri, 04/02/2010 - 11:11 | Link to Comment Fritz
Fritz's picture

Equities will soon be celebrating Stimulus 2.0 and QE 2.0 without regard to sustainability.  Futures will get gunned to shape psychology.

I miss the old days when reality mattered.

 

Fri, 04/02/2010 - 13:59 | Link to Comment Dirtt
Dirtt's picture

You know it's bad when you long for the days of reading 10K's into the wee hours of the night.

Fri, 04/02/2010 - 11:35 | Link to Comment Augustus
Augustus's picture

It will be interesting to see if the withholding receipts come close to matching this report.

Fri, 04/02/2010 - 12:25 | Link to Comment Lux Fiat
Lux Fiat's picture

Not really related, but was watching "Enron: The Smartest Guys in the Room".  There was a comment that Jeffrey Skilling made during a very friendly interview during or shortly after the California energy "crisis".

  Skilling:  "We are doing the right thing."

  Interviewer "You're the good guys." (not phrased as a question, but as a very soft setup)

  Skilling:  "We are the good guys.  We are on the side of angels."

  Given Lloyd Blankfein's not so distant claims to deistic preference in work, it does make me wonder.  When CEOs start claiming divine mandates, does it mean that things are really screwed up under the hood, and the public just doesn't have a clue yet?

 

Fri, 04/02/2010 - 14:02 | Link to Comment Dirtt
Dirtt's picture

Nice work.  Had no idea Skilling said that.

 

Fri, 04/02/2010 - 18:22 | Link to Comment Lux Fiat
Lux Fiat's picture

I'm no forensic accountant, and financial entity accounting is far from a strength of mine, but from my non-expert vantage point, it is interesting that total operating cash flow from 2007 - 2009 is negative. ($48.875 b in 2009, $1,894 b 2008, -$68.197 b in 2007).  I'm sure that's why Blankfein gets paid the big bucks.  That's not the case with BAC or JPM - although can't say that I have read their statements and footnotes though.  Citi is pretty ugly.  We'll see if the gov't share offerring goes swimmingly.

http://finance.yahoo.com/q/cf?s=GS&annual

http://finance.yahoo.com/q/cf?s=C&annual

Fri, 04/02/2010 - 13:25 | Link to Comment Orly
Orly's picture

Sounds a lot like Jan Hatzius.

He is usually right on the money.

:D

Fri, 04/02/2010 - 15:48 | Link to Comment Blithering ORSA
Blithering ORSA's picture

One subtlety I noticed in the other NFP was a $0.01 drop in hourly earnings.   If total employment went up, that means we are creating lots of low-paying jobs....

Sat, 04/03/2010 - 14:00 | Link to Comment Clycntct
Clycntct's picture

I'm late to this thread but if anybody is watching  could someone steer me to a updated chart on the exhaustion rate.

This one below was from 09

Exhaustion Rate Hits New Record: More Than Half Of Unemployed Exhaust Benefits Before Finding A Job

Sat, 04/10/2010 - 10:54 | Link to Comment mark456
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