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Goldman's Take On NFP
Goldman's Hatzius, whose +100,000 NFP revision to 600,000 yesterday, officially means he has lost the magic touch, offers his take on the NFP disaster. Ever the optimist, he still manages to find a silver lining. Alas, the market doesn't care, and instead is holding its breath to the joint Obama-Biden teleprompter conference praising the -215k adjusted NFP number.
Weaker than Expected, a Mirror Image of April Results
BOTTOM LINE: In several respects, the May employment report is a mirror image of the April report: skinny and disappointing private-sector payroll gains, a drop in the jobless rate due to labor force exodus, and larger-than-expected wage gains. Manufacturing data strong in May; data on hours worked still support firm GDP growth in Q2, thanks to longer workweeks and large prior gains in payrolls.
KEY NUMBERS:
Nonfarm payrolls +431k in May vs. GS +600k, median forecast +536k.
Private payrolls +41k in May vs. GS +150k, median forecast +180k.
Unemployment rate 9.7% in May vs. GS 9.7%, median forecast 9.8%.
Average hourly earnings +0.3% in May (mom, +1.9% yoy) vs. GS and median forecast +0.1%.MAIN POINTS:
1. As widely expected, the hiring of temporary Census workers dominated the payroll gains reported for May, as a net increase of 411k in these workers drove overall government payrolls up 390k. In the private sector, job gains were a skinny 41k, and 31k of that was offset by downward revisions to March and April. Since September most revisions (to total payrolls) have been higher, so this is a cautionary sign.
2. The household survey told a similar story: its measure of employment was down 35k in May (though up 407k on a payroll concept adjusted basis). Although the unemployment rate dropped back to 9.7% in May, it did so because of a 322k drop in the labor force. Broader measures of underemployment also fell in May; the "U6" measure that incorporate those working part-time for economic reasons and marginally attached workers fell ½ point to 16.6%.
3. In many respects, these data mirror opposite moves - at least relative to expectations - in the April report. Thus, some averaging is warranted. For payrolls, this implies private-sector hiring of about 130k; for unemployment we see no meaningful change; for wages, it implies a 0.2% average monthly increase, as wages were up 0.3% in May vs. a 0.1% (upward-revised) April increase.
4. The one sector that did well in May was manufacturing. Payrolls were up 29k (0.2%), and the workweek lengthened by 18 minutes to 40.5 hours (+0.7%). So the report suggests another large increase in industrial production. Elsewhere, job gains were mostly thin but down in construction (35k), retail (7k), and finance (12k). In an encouraging sign of future growth, temporary help continued to show increases (31k).
5. With overall workweeks also longer, though only by 6 minutes, the index of hours worked in the private sector rose 0.3%. Given the larger gains reported for prior months, this is tracking at a 4% annual rate, suggesting potential upside to our 3% estimate for annualized real GDP growth for Q2.
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Looks like GS uncanny ability to predict the figures the day before the release has ended. This is a couple in a row now they've not just got wrong, but gone the wrong way on their last minute revision.
Is this evidence that their inside feed has been cut?
Maybe. Could also be that Hatzius just had a lucky streak. Either way, his reaction to the numbers show that he is little more than another Liesman. Not that he was top shelf before, but he has no credibility with me now.
We've hit the bottoms!!! Hurry buy a house - never mind if you don't have a job, you can just walk away from any financing obligation you may be able to wrangle. And buy equities while you can on this excellent opportunity. And buy bonds cuz we have deflation. Buy art, more metals, and anything from Coach or Tiffany . . . or Walmart or Target.
Buy Buy Buy (yes, it is sarcasm, not very artful but count on hearing talking heads and Leo tell us why we should)
Christina Romer is the smoke blower in chief for the employment numbers. She said May was a good month even with 411,000 census part time jobs.
Put a beard on her and she'd look like Satan Claus. I guess when you are part of the ministry of misinformation it's best to look the part.
Goldman sold their last long positions to clients yesterday, and are now covering their tracks.
Tyler, you should open a open thread on the new Bilderberg conference in Sitges!
http://bilderberg2010.com/
Sitges is the no.1 gay hangout of Europe, is Obama going.
LMAO! How true!
Fuck you Goldman, Fuck you, you lying POS. Goldman be damned!
It's all coming together to profit those of us short the market.....
ECRI indicators down,starting circa Jan 2010
Leading Economic Indicators down, circa March 2010.
Other metrics from other "predicitive" economic statistical models, all peaked and turned down around Jan 2010.
THe market can run, but it can't hide....the truth will win out (which is, unfortunately, a downward trend to who-really-knows what depths......)
"expect strong employment Nos." statement by Biden on Wednesday was either to reinforce the fact as to how clueless he and bama are, or these chaps are planning something big and touting strong employment and the follow on crash due to disappointment may be serving a larger purpose
Or they could smell the stench wafting from Euroland, and wanted some buying pressure to counteract.
Probably should cover my shorts, this news makes me think market will be up at least 50 points at the close today.
Abstracts from GS drivel:
'Private payrolls +41k in May vs. GS +150k, median forecast +180k'
GS should get down from their brand new NYC ivory tower and start travelling the country; then they might see there are no jobs.
'manufacturing ... payrolls were up 29k (0.2%), and the workweek lengthened by 18 minutes (+0.7%)'
What is the margin of error of the survey -probably +/- 5%, so the payrolls could have dropped by a bucketload and the working week could just as easily have fallen in a massive stylee.
'elsewhere, job gains ... down in construction (35k), retail (7k), and finance (12k)'
That looks like everybody outside the public sector then.
'in an encouraging sign of future growth, temporary help continued to show increases (31k)'
'overall workweeks also longer by 6 minutes (0.3%) ... tracking at 4% annual ...'
That can only be Phillipino house-maids and Consuela for those sucking at the Fed's Discount window -and they are having to work longer.
I am pissed, and will come back tonight to "Man Up" and look deeper into this jobs report.
Very good, Leo. And I'm not being sarcastic. The only positive I saw was the longer work week, but that wasn't so hot either. Not just the census, but the number of temp agency hirings is bothersome. Just as we saw in Europe over the last 2 decades, employees are a liability.
And here I see an ad referenced on TF where they say "NO UNEMPLOYED CANDIDATES."
And everyone over on TF is cheering it...Douchinger too. None of them would hire someone unemployed.
WTF, do these people hate EVERYONE? It's like they desire for everyone to get shit on. First it's cut those UE so these people will be "motivated" to find work that doesn't exist, then "yeah, I wouldn't hire an UE person either."
A bunch of would-be slumlords led by a guy who made his money in the .com bubble.
I can't wait to see GS's trading results for this quarter. Then we will be able to tell if they were intentionally wrong or just wrong.