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September Jobs: Crisis Averted


A look at the details shows this was a pretty weak report, even with surprising backward revisions.


If the Fed was looking for an excuse not to cut later this month it has found it with today's jobs report.

Employment Situation: September 2007

Employment rose in September, and the unemployment rate was essentially unchanged at 4.7%, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Nonfarm payroll employment rose by 110,000, following increases of 93,000 in July and 89,000 in August (as revised).

In September, health care, food services, and professional and technical services continued to add jobs, while employment trended down in manufacturing and construction. Average hourly earnings rose by 7 cents, or 0.4 percent.

Birth/Death Revisions

For the first time since January the Birth Death Model did not look like it was from outer space.

Click here to enlarge.

Still the BLS was adding construction jobs and financial jobs at a time when logic dictates we are losing both. The most interesting number was the subtraction of 36,000 jobs from leisure and hospitality. Given that leisure and hospitality has been one of the jobs drivers for quite some time, it may be a category to watch now.

A look at the details shows this was a pretty weak report, even with these surprising backward revisions.

Establishment Data Details

Click here to enlarge.

Manufacturing continues to be a disaster. 33,000 goods-producing jobs were lost, of which 18,000 were manufacturing jobs. Note the birth/death model is still adding manufacturing jobs.

Also note that of the 110,000 jobs created this month, a whopping 37,000 were government jobs. That means a mere 73,000 private sector jobs were created, many in low paying categories.


  • Health care employment continued to expand in September (33,000), with job gains in ambulatory services and in hospitals. Over the year, health care added 396,000 jobs.
  • Employment in social assistance increased by 12,000 in September and by 98,000 over the year.
  • Employment in food services and drinking places increased by 25,000 in September. This industry has added 355,000 jobs over the year.
  • Within professional and technical services, job gains occurred in September in accounting and bookkeeping services (10,000) and in management and technical consulting services (10,000).
  • Job losses continued in employment services (-35,000); this industry has lost 203,000 jobs since its recent peak in December 2006.
  • In retail trade, building material and garden supply stores lost 17,000 jobs over the month.
  • Financial activities employment edged down in September.
  • Despite a gain of 6,000 jobs in commercial banks, credit intermediation lost 12,000 jobs over the month. Since February, employment in credit intermediation has fallen by 46,000.
  • Manufacturing employment decreased by 18,000 in September. Over the year, manufacturing lost 223,000 jobs.
  • In construction, residential specialty trade contractors shed 15,000 jobs over the month and 160,000 since February 2006.

All in all this was a poor result but not an unmitigated disaster.

Treasuries Selloff

Curve Watchers Anonymous is watching the action in treasuries today in light of the jobs report.

Click here to enlarge.

Once again, stubborn yields at the long end of the curve are not doing housing any good. Mortgage rates are higher than they were right before the Fed cut 50 basis point and also above where they were a year ago.

Click here to enlarge.

The above charts are courtesy of Bloomberg and as of 2007-10-05

Crisis Averted?

Professor Kevin Depew has written Whew! Crisis Averted Until the Next Thing. Inquiring minds will want to take a look.

I am sticking with what I said yesterday in Payroll Playbook: Is Bernanke in Control?: "If jobs are just slightly weak to neutral, Bernanke just might want to send a message."

With this jobs report and the current crisis seemingly averted, I expect the Fed to go on hold at the October FOMC meeting, barring another crisis that strikes somewhere else.

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