Rosenberg Sees Friday’s Employment Numbers As Too Much of a Good Thing

Gluskin Sheff Chief Economist & Strategist David Rosenberg questions Friday’s employment number and points out to some “very lumpy increases in some very non-cyclical segments of the economy.”

A 1-IN-35 EVENT

“It’s remarkable nobody talks about this. The big surprise in the payroll data was the service sector component; it rose 58k. But we know from the ADP report that service sector employment fell 81k, which was fractionally worse than the 79k decline in October. Such a discrepancy has occurred less than 3% of the time in the past, and each time, the following month after the big gap, there was a convergence … with headline nonfarm payrolls swinging 100k lower on average, which would imply a 111k decline when December’s figure comes out.

Also take note that the +58k print in the service sector payroll was completely at odds with the 41.6 reading in the ISM non-manufacturing employment index in November — a figure that in the past was consistent with a -192k tally in service sector payrolls and never before aligned with a positive number. Go back to the 2001 recession, and the worst ISM non-manufacturing jobs subindex was 43.9 (right after 9/11) and here we published a figure that was more than two points shy of that!

So as we wonder how the headline number could only be -11k on Friday, there were some very lumpy increases in some very non-cyclical segments of the economy:

• Administration/waste management +87k
• Health/education +40k
• Government +7k

The rest of the economy shed 145 jobs and the declines were spread across
nearly 60% of the industrial base from retail, to transports, to manufacturing, to construction. For some reason, we didn’t see this dichotomy mentioned anywhere in the weekend press.”