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Previewing Today's Non-Farm Payroll Report

Tyler Durden's picture




 

One month after what was dubbed the most anticipated jobs report of all time, we are getting what may be the biggest dud of a monthly NFP update in recent years. The reason is twofold: i) everyone knows it will be ugly, with consensus looking at a +87,000 print, far below the mid-100s seen in the recent past, whether due to a catch up to the pre-election "spin" or due to impacts from Hurricane Sandy and ii) the report will have so many 'adjustments' embedded in it, anyone with a 1st grade econ-propaganda education will be able to spin it upward as they see fit. What is certain is that the broader mainstream media will continue to focus purely on the quantitative aspect of the report, while the real story over the past 3 years has been a qualitative one: a shift to lower paying jobs, a painfully slow (if any) rise in average hourly earnings, a transformation of the US labor pool to "Just In Time" inventory as virtually all new hiring needs are met by temps and part-timers, and finally a secular shift to an older labor force, as job creation in the 25-54 category since January 2009 is still negative!

One person who has done a good job at previewing today's largely meaningless NFP report is Bloomberg's Joseph Brusuelas in today's BBG Brief report.

Some of his observations:

The November employment report will require more interpretation than usual to account for both the impact of Hurricane Sandy and the changes in industry hiring trends that are behind the recent improvement in jobs gains. The hurricane affected an area responsible for about 16 percent of overall U.S. output.

 

A sampling period that was one week shorter and a possible slowdown in hiring ahead of the fiscal cliff may  also make the report more difficult to interpret.

 

The difficulties in disentangling all these special factors means investors may want to compare the difference between the October and November jobs estimates with the 12-month average growth of 163,000 private sector jobs.

 

Industry level analysis may also provide insight regarding the direction of the labor market.

 

The major impacts on the November employment report will be a slowdown in service sector hiring clustered in the U.S. Northeast in the establishment survey, and the number of individuals classified as not able to work due to weather in the household survey.

 

After accounting for special factors, the underlying trend of a 150,000 gain in total employment over the past 12 months should probably hold once these considerable storm-related and fiscal cliff distortions fade. The  Bloomberg consensus forecast is for total employment gains of 87,000 and that the unemployment rate will hold steady at 7.9 percent.

Naturally the BLS is expected to apply its black box adjustments, whose methodology is explained more or less nowhere, and to boost the number.

The BLS will probably adjust its estimation procedures to reflect the increase in non-respondents in the six major states affected by the storm, similar to what it did following Hurricane Katrina in 2005. Outside of those areas employment gains should remain steady.

But what can not be adjusted out is that as the chart below shows, the bulk of all secular job "gains" have been in low-quality, low-wage jobs.

The report may also show temporary weakness in the four low-wage subsectors — leisure and hospitality, health care and social assistance, retail and temporary jobs — that have been responsible for about 51 percent of the private sector job growth observed over the last year. This reflects the low-wage bias due to the economy’s enormous labor slack, which is the primary reason weak wage growth has been such a persistent theme throughout the recovery. Jobs in utilities and transportation may also be marginally affected by the storm.

 

Outside of these industries, one pressing cause for concern is the negative trend in manufacturing, which has lost an average of 5,000 jobs over the past three months. That may be tied to large industrial firms worried about slower external demand and the fiscal shock scheduled to take place next year.

In other words: non-jobs paying non-wages, perpetuating the non-thinkers' belief in the non-recovery. Just another day in your friendly neighborhood banana republic.

 

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Fri, 12/07/2012 - 08:59 | 3042073 GetZeeGold
GetZeeGold's picture

 

 

When do we get to preview the revisions? 

Fri, 12/07/2012 - 08:58 | 3042074 LongSoupLine
LongSoupLine's picture

...everyone knows it will be ugly...

 

 

Hence, look for a big sewer pipe up the ass style manipulated "beat" to get the algos into a full fucking corky retard spin to the fucking moon.

Fri, 12/07/2012 - 09:20 | 3042107 spastic_colon
spastic_colon's picture

yep the MSM has already been talking down the number so badly that anything above negative 100,000 will be a resounding victory!

Fri, 12/07/2012 - 10:11 | 3042334 LongSoupLine
LongSoupLine's picture

Fucking nailed it...those cocksuckers are so fucking predictable it's retarded.

Fri, 12/07/2012 - 08:59 | 3042075 Hayabusa
Hayabusa's picture

It's official, we've become a part-time, hollow, superficial QE driven economy - all sizzle, no steak.

Fri, 12/07/2012 - 09:01 | 3042081 Bobbyrib
Bobbyrib's picture

That's been official for years. There will be no return to normal, and there will be no recovery. This is it. Plan accordingly.

I'm thinking small farm the fuck away from Monsanto and to pay as little as possible in taxes.

Fri, 12/07/2012 - 09:06 | 3042086 GetZeeGold
GetZeeGold's picture

 

 

Buying up all the land I can in the gulch.....gonna be worth it's weight in gold.

Fri, 12/07/2012 - 09:15 | 3042099 Bobbyrib
Bobbyrib's picture

There might be slight corrections (manipulations) along the way, so I wouldn't leverage at all (as all other ZHers say debt free).

Fri, 12/07/2012 - 08:59 | 3042076 negative rates
negative rates's picture

It's bananas, b a n a n a s.

Fri, 12/07/2012 - 08:59 | 3042079 Bobbyrib
Bobbyrib's picture

If it weren't for Sandy.../sarcasm.

Fri, 12/07/2012 - 09:06 | 3042090 overmedicatedun...
overmedicatedundersexed's picture

you left out the participation rate and those no longer in the labor pool thats counted ..the massive number of silent workers without jobs and it seems without a voice.. and growing every month..

Fri, 12/07/2012 - 09:06 | 3042091 Samsonov
Samsonov's picture

There's no way to predict how the trading robots will react to the employment news, or course, but what we do know is that it will be irrational.  So, given that, it stands to reason that as the irrational acts pile up, one after another, the inevitable shock of reality will be that much greater.  Reality will win, yet again.  Just be sure your bet is on reality.

Fri, 12/07/2012 - 09:11 | 3042094 The Master
The Master's picture

I wonder if they make it really ugly (zero or even negative print) to justify the filth that will surely spew from Ben's mouth in a few days...

Fri, 12/07/2012 - 09:27 | 3042125 Common_Cents22
Common_Cents22's picture

Only if old people knew about the theft of their fixed income returns.  Old dumb coots have been fleeced and now forced to work at walmart part time and vote for more government benefits, that they have paid dearly for, but they think of govt benefits as "free".   Didn't their depression era parents tell them there is no such thing as a free lunch?  except in the govt soup/bread line.  No soup for you!

Fri, 12/07/2012 - 09:32 | 3042147 chistletoe
chistletoe's picture

silver and gold just started spiking upwards,

about five minutes before the official release of the report.

of course, no inside information is involved.

good call, Tyler, on the disaster of the new unemployment rate,

lwith a minute still to go it looks like you hit it spot on .....

Fri, 12/07/2012 - 09:54 | 3042271 disabledvet
disabledvet's picture

Aging population...interest rates at all time lows, food and energy prices collapsing, Ben CREATING the Japanese scenario not preventing it. I'm sure "it'll all just blow over."

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