the November 2012 Employment Situation Report

the report

As usual, at 8:30am Eastern time, the Bureau of Labor Statistics of the Labor Department issued its monthly Employment Situation report.  Economists had been expecting a gain of around +80,000 new jobs, arguing that the negative effects of Hurricane Sandy would depress job creation in the Northeast.  The actual figure came in at +146,000, consisting of +147,000 additions in the private sector and a loss of -1,000 jobs by state and local governments.

As I’m writing this, S&P futures have swung from a loss of about 2 points to a gain of 4.

the revisions

If you recall, last month’s ES was somewhat controversial.  Total job gains for October were reported as a whopping +171,000 (+184,000 private, -13,000 government).  September figures were revised up by +28,000, as well.  Some Republicans claimed that the Labor Department was succumbing to administration pressure to inflate the figures in order to influence the election.  I can imagine politicians from either party contemplating trying to influence the figures, but I can’t imagine that any attempt could be kept secret for more than a nanosecond.

In any event, the initially reported October figures were revised down, to +138,000.  The private sector hires were revised up, however, to +189,000 new jobs.  The entire revision came from reported government layoffs of -51,000.  Hmm.

September figures were also revised down from +148,000 (+128,000, +20,000) to +132,000 (+122,000, +10,000).

For September + October revisions totalled -49,000 (-1,000, -48,000).

State and regional jobs numbers come out on December 21st.  They might be worth taking a look at.

my take

The November job additions are good news.

I’m not sure where the +80,000 consensus estimate came from.  In each of the past several months the economy has been adding about +150,000 new jobs.  The areas worst affected by Sandy, the Northeast, represent a little more than 10% of the population of the US.  If you argue the effect of the hurricane was to completely eliminate job creation in the Northeast, and gross up the estimate by 10%, the result is +88,000 jobs.  That would be not much more than half the recent job growth trend.  Adding another, say, +8,000 to account for storm-related job disruption elsewhere doesn’t change the picture much at all.  So it seems to me there’s something wrong with the estimates–not that I’ve taken the time to peruse any of the particulars.

The Labor Department says that “Hurricane Sandy did not substantively impact” the November figures.  If my back of the envelope calculation in the paragraph above is even remotely near the mark, the storm shouldn’t have.  Maybe ex Sandy the job additions would have been +10,000-+15,000 higher.

The biggest gains for the month came in retail, with +52,600.  The ES figures are seasonally adjusted, so this means holiday hiring is pretty robust this year.  Construction (-20,000) and Manufacturing (-7,000) lost jobs.  These numbers fit pretty well with the sense I’m getting from company reporting that consumers are oblivious to the impending fiscal cliff, while businesses are much more cautious.

All in all, I think the current ES is as encouraging as bulls could hope for.

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