Friday, December 5, 2008
The November employment report was nothing but treacherous. The monthly nonfarm payroll fell 533,000, and the decline was broad-based. The goods-producing industries slashed another 163k jobs, while service industries cut more , 370k, which alone exceeds the market's expected decline in total nonfarm payroll , 300k.
There is absolutely no silver lining in this report, except that the last two men standing are education and health care and government, who added 52k and 7 jobs, respectively. But even those giants are subject to fall. The labor market is sliding off a cliff and setting all sorts of records along the way. However, the size of the record - 34 years or 28 years - depends how you measure the decline.
Obviously the media wants the biggest record possible:
U.S. job losses worst since 1974 as downturn deepens
While that is true in levels…
Somehow the media’s headlines sell better than would mine, but mine is a better representation of the proportion of the decline. A percentage change relates the magnitude of the payroll drop to the size of the payroll, which changes over time.
To be sure, the report was certainly troubling. A weak labor market – scratch that – a weaker-than-expected-and-set-to-worsen-futher labor market throws fuel on an already burning housing market and openly combusting consumption. But if the economy is going to get gloomier, why not wait to set the bigger record then?