Friday, May 07, 2010

Monster employment number but is it real?

The headline print was a huge 290k new jobs added in April. In general many signs looked up as hours worked increased and temporary hiring was up as well.

I haven't seen the number of census workers added but even assuming it's 100k that still leaves a huge jump in payrolls right?

Well, then we go to our old favorite - the fantasy birth/death model. This is the old fashion plug that was used so well during the Bush administration to generate jobs that may or may not have ever existed. Remember back in the 90s it would have been rare to see this number be over +/- 10k jobs in a month.

This month the BLS wants us to believe that 188k jobs were created that are out there we just haven't seen them yet. You can't subtract these jobs from the headline number because of various calculations that the BLS does to weight these jobs different, but suffice to say this huge number (up from just 81k in March) severely undermines my confidence in a otherwise strong report.

I'll update this post as I work through the data.


The unemployment rate jumped to 9.9% from 9.7% but this is mostly a math issue. Assume there was 1 person out of 10 unemployed and 1 person on the side that had stopped looking. Your unemployment rate would be 10%.

If that person suddenly decides things are looking better and jumps back into the job market then the unemployment rate with JUMP because 2 people out of 11 - or 18% - will be unemployed. The labor pool - total employed and unemployed looking - increased 805k and pushed unemployment up 0.3%.

The Good: Average workweek up, average hourly earnings up a penny, temp workers up 26k, Feb and Mar were both revised upward.

Census workers only added 66k so there should be a monster addition to payrolls next month.

In general, it's a good report, but keep in mind this is the peak of stimulus spending and unemployment is still almost 10%. At some point our economy will need to generate real CAREERS again. We seem to have succeeded in generated some jobs "temp help, leisure hospitality, etc" but these are not careers that will enable people to start households and spend like we did in the past.

Separately, the market is still not able to shake yesterday's freak out. We keep blowing through technical support levels like they don't exist and the Nasdaq is particularly weak.

I expect some end of the day buying so people can go home flat over the weekend but it's interesting to see some volatility return to the markets.

No comments: