Unemployment’s Surprising Drop

The Labor Department is out with its November unemployment rate and the change in non-Farm payrolls.  The official unemployment rate in November went down to 10.0% from 10.2% in October.  That is of course the official rate, as the unofficial rate is tallied much higher and most agree on somewhere around 17%.  The change in non-Farm payrolls for November came in at a much ‘less-bad’ rate of -11,000 jobs.

Bloomberg had estimates at 10.2% for the unofficial unemployment rate and -100,000 on non-Farm Payrolls on the jobs front.  We saw a Dow Jones consensus yesterday of 10.2% and -125,000, so you at least have a range.  The question now is whether you believe the data or not.

Average hourly earnings came in at +0.1% and average hours per week rose 0.2 hours to 33.2 hours, while Bloomberg listed +0.2% on wages and 33.1 hours as the consensus estimates.  The October data had been +0.3% on wages and 33.0 hours.

The non-Farm payrolls data from October was also revised down to -111,000 from -190,000.

We had noted yesterday afternoon that President Obama’s language at the White House jobs summit seemed to be taking down expectations on the unemployment rate, but that is hard to tell on any payrolls data. It is still hard reading a new president, but his tone and language yesterday seemed much more concerning than this report would indicate today.  I had pointed out an unlikely chance that unemployment could potentially go back under 10% before year-end, and now it seems a bit more plausible rather than possible.

Yesterday’s poor ISM data on the non-manufacturing sector (i.e. service economy jobs) flies completely against this notion of what the Labor Department said today.  The Labor department said that services jobs created were +58,000.

This is obviously solid data, and much better than almost every economist was expecting.  It is certainly better than what we were expecting and far better than a bias feel yesterday afternoon.  Now the question looms…. Is this data from the Labor Department REAL or is it due to crafty computing?

JON C. OGG