Rosenberg: 16 Reasons I'm Not Buying The Employment Report
[This is a great follow up to our recent posting on the problems with seasonal adjustments which obfuscates the real status of employment.]
I went through the January data one last time with a fine tooth comb. I fail to see what got everyone so excited, beyond the upward revisions to the back data. That only proves that productivity has been weaker than initially thought. And the income from those upward job revisions has probably already been spent. But as I highlighted yesterday, the broad-term trends are slowing down and doing so discernibly.
There were a variety of sobering developments in the latest data report.
1) Let's not forget that the 157k headline print was below consensus and 22% lower than the 201k average of the prior three months. That's the problem with upside revisions — they go on to exaggerate the slowdown.
2) Private payrolls have slowed for two months running — 256k in November to 202k in December to 166k in January. This was actually the lowest print in four months and fully 26% lower than the three-month average. So get with the program — the pace of private sector job creation is slowing down, not speeding up.
3) Temp agency employment fell 8k in January, the first decline since last September. This sector is widely viewed as a leading indicator of labor demand.
4) Self-employment in the nonfarm sector plunged 189k, the sharpest decline since last February and down now in three of the past four months. This too is a leading indicator and moving in the wrong direction.
5) Average hourly hours for production and nonsupervisory fell 0.3% in January after a flat December. Another leading indicator heading in the opposite direction as escape velocity.
6) As for incomes, or lack thereof, average weekly earnings dipped 0.1% for production and nonsupervisory workers.
7) Household employment came in at the grand total of +17k. That is an 85% haircut from the average of the prior three months. Why all the exuberance over this report. The peak in Household employment was in October. How has that been missed by the masses, especially since it is this metric that leads at turning points?
8) The population and payroll comparable number from the Household Survey showed a 351k plunge, the second such large decline in the past three months.
9) The most cyclical component of payrolls is durable goods manufacturing —the grand total of +3k in January or 67% lower than the three-month average and the weakest tally since October. This widely-held view of "escape velocity" comes from where exactly? The front cover of Barron's?
10) Education/health/leisure/professional services accounted for half the job gains last month, This is why the diffusion index for private payrolls slid to 59.6 from 64.5 in December, a four-month low. And in the mother of all non-ratifications, as it pertains to the ISM index, the diffusion index for manufacturing (which measures the breadth of the job gains) dropped from 54.9 to 48.1 in the first sub-50 reading since last September.
11) The markets rejoiced a report on Friday that revealed a 126k increase in the ranks of the unemployed in .January and this followed a 164k pickup in joblessness the prior month. Try and convince these folks how great the economy is doing, Ditto for the 169k that dropped out of the labor force.
12) Of the increase in unemployment - those who were job losers jumped 229k, the sharpest advance since November 2010. Job leavers fell 2k and down in two of the past three months — a sign of receding worker confidence. New entrants dipped 4k after a 35k falloff in December. And re-entrants fell 72k, In other words, the churning or turnover in the labor market was left for wanting in .January.
13) The manufacturing workweek slipping 0.25% to 40,6 hours from 40.7 and overtime stagnated for the second month in a row, And you call this a renaissance? Average weekly hours sagged 0.5% in the key durable goods sector,
14) The short-term unemployed — a real-time cyclical indicator — measured by the number of folks unemployed for less than five weeks, spiked 90k after an 80k rise in December. And those unemployed for between 5 and 14 weeks soared 190k and up in three of the four months.
15) Those working part-time because they have to, not want to, due to "slack" economic conditions, jumped 198k in the steepest advance since last September.
16) The average weekly hours index for production and nonsupervisory workers — a GDP proxy — was down 0.2% in January, the sharpest decline since last August,