Doubting Thomas Review Of “In-Line” Jobs Data

If you look at today’s jobless numbers and loss of jobs, it really looks OK on the surface.  The numbers are close enough when you consider how the calculations (which we are expected to believe) get made and get delivered.  But going one layer down into the data and adding in the caveat that Labor Department is habitually wrong on its data, and this just isn’t getting any better.  Dr. Pangloss would say that this is resemblant of a light recession climate rather than a deep one. 

A drop of 62,000 non-farm payrolls was reported for June, and this number is only about 7,000 worse than the 55,000 consensus estimates that was being used.  The unemployment rate came in flat at 5.5% for June (same as May), yet economists had somehow expected 5.4%.  May’s non-farm payrolls were also revised lower as well by 13,000 to show a drop of 62,000 jobs for that month too (prior 49,000).

These numbers aren’t good and are still going the wrong way for the Dollar and for the hopes of a recovery.  But on the surface they would actually be "close enough."  The issue is that there is a real problem.  When you begin parceling out the job creations and looking at the break-down of jobs lost this is really bad.  We are back to manufacturing being a steady loss sector as it posted a loss of 33,000 jobs.  Construction, which could have been assumed as bad, lost 43,000 jobs.  While the service sector added 7,000 jobs, the professional and business services sector lost a massive 51,000 jobs. 

The other gaining sectors are outright keeping the numbers from looking much worse.  The government added 29,000 jobs, and many economists and traders will discount this and determine the 62,000 would really be 91,000 since so many estimates leave government jobs on the sidelines.  Also, health care employment added 15,000 jobs.  Many count that as a near government sample, and that is three months of government jobs creation.

So what we are sitting on is a number that would really be far worse if you exclude government and health care workers.  Add that Doubting Thomas review of this month’s numbers in with the revisions where the Labor Department just can’t seem to get it accurate and the picture would really be far worse.

Jon C. Ogg
July 3, 2008