Summary: It’s the big day for economic stat junkies. Has the economy ended its long flirtation with recession, limping along near the 2% stall speed — supported by years of fiscal and monetary stimulus (now fading)? The last few quarters of GDP numbers suggest yes, but the job numbers have refused to cooperate. Here we look at the November report. It looks good. This is the first of two posts today.
- The big lesson from this report
- The big picture of the economy
- Household survey
- Establishment survey
- The hot sectors for jobs!
- For more information about
(1) The big lesson from this report
What can we learn from the November employment report? First, that one minute spent reading or watching economists predict economic numbers is a minute wasted forever. Most of the numbers are noise (changes withing the error bars; watch the trend instead) — and the forecasts are wild guesses. Life is short; spend it wisely. Here the forecasts of the best for the November gain in non-farm employment from the Establishment survey (CES). They guess because we want guesses.
- JP Morgan 200K
- Goldman Sachs 220K
- Citigroup 225K
- HSBC 230K
- UBS 230K
- Credit Suisse 235K
- Morgan Stanley 235K
- Deutsche Bank 250K
The actual was 321,000 (+2.8% SAAR), plus another 44,000 from revisions to September and October.
(2) The big picture of the economy
This report supported the hopes of those hoping the US economy has returned to “normal” growth. But one swallow does not a summer make. Even with a good November, the YoY NSA growth in jobs is 2.0% by the Household Survey (CPS) and 2.0% by the Establishment Survey (CES) — two methods, same result.
The Bureau of Labor Statistics conducts two surveys: one of households, one of businesses. They are not directly comparable, each giving different perspectives on the US economy. The Current Population survey looks at households. Compared to the survey of businesses it has large error bars; there are no revisions. It’s the basis for the headline unemployment rate, and gives useful data not in the more-accurate business (establishment) survey. Also, some research suggests that the household report shows inflection points before the establishment survey.
Both give identical pictures for the past year (YoY NSA): people employed (CPS) +2.0%, non-farm jobs (CES) +2.0%. They’re also similar for the past two months (SA): +2.3% and +2.5%.