American employers added almost twice as many jobs as forecast in October, helping steer the economy clear of recession even as the housing slump deepens. Stocks advanced and Treasury notes weakened after the report, which economists said makes an interest-rate cut by the Federal Reserve even less likely next month.My Comment: Stocks advanced? Treasuries weakened? Look again.
"The labor market continues to be inconsistent with fears of a recession," said Dean Maki, chief U.S. economist at Barclays Capital in New York and a former senior economist at the Fed. "This report will increase the Fed's conviction that it should keep rates unchanged in coming months."My comment: Fed's conviction to leave rates unchanged? You can't be serious. Dean Maki must be talking about the Fed in some alternate universe somewhere.
Wages rose less than forecast, suggesting compensation may provide less of a cushion against declining home values in coming months. Hourly wages rose 3 cents, or 0.2 percent, on average to $17.58 in October and were up 3.8 percent from a year earlier.My comment: How can they even begin to talk about wages as a cushion against home prices. The idea is absurd. Consider the following conversation. Honey, I have good news and bad news. The bad news is the value of our house fell $200,000. The good news is my hourly wages went up by 3 cents.
The Official (Alternate Universe) Data
On November 2, the BLS released the Employment Report for October 2007
Nonfarm payroll employment rose by 166,000 in October, and the unemployment rate was unchanged at 4.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains occurred in professional and business services, health care, and leisure and hospitality. Manufacturing employment continued to decline, and construction employment was little changed.The overall numbers look OK on the surface but once again the devil is in the details.
- Manufacturing shed another 21,000 jobs this month and continues to lose jobs every month.
- Government added 36,000 useless workers.
- Leisure and hospitality (typically very low paying jobs) added 56,000 jobs.
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The BLS has shown a net gain of jobs added to new businesses in both construction and financial activities nine consecutive months from February through October.
The BLS is assuming not only that jobs were added, but that new unaccounted construction businesses were created in this environment where business capex spending has been weak, housing has been horrid, and over 170 lenders have gone out of business or stopped writing loans since last December as per the Mortgage Lender Implode-O-Meter.
Clearly this is reporting from an alternate universe.
A note of caution: One cannot take the birth death adjustments and subtract them from the reported numbers because one set of numbers is seasonally adjusted and the other is not.
Household Survey Data
The household data showed a civilian labor force decline of 211,000 and an overall employment decline of 250,000.
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Bond Market's Reaction
In this universe, Curve Watchers Anonymous is watching the yield curve and quipped, "If the bond market does not believe this jobs number then why should I?"
Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/
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