No Rick Santelli and Zero Hedge, One Million People Did Not Drop Out of the Labor Force Last Month

So today following an otherwise pretty darn good jobs report, we get the usual perma-pessimists at Zero Hedge and Rick Santelli over at CNBC (I will folllow up with the video link when they put it up) proclaiming that the report showed a drop of over 1 million people from the labor force in one month. Of course, as ususal, both Santelli and Zero Hedge have a real reading comprehension problem and completely missed that this million+ people isn't some new January phenomenon, but a result of the BLS using the 2010 census data to have more accurate data. In other words, the changes in the Household Survey to the various measures had taken place over the years prior to 2010, but for simplicity's sake, the BLS incorporates these changes into one month (which they clearly point out). The relevant text from the report is below (bold is mine):

"Effective with data for January 2012, updated population estimates which reflect the results of Census2010 have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population during the decade. The change in population reflected in the new estimates results from the introduction of the Census 2010 count as the new population base, adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. The vast majority of the population change, however, is due to the change in base population from Census 2000 to Census 2010.

In accordance with usual practice, BLS will not revise the official household survey estimates for December 2011 and earlier months. To show the impact of the population adjustment, however, differences in selected December 2011 labor force series based on the old and new population estimates are shown in table B.

The adjustment increased the estimated size of the civilian noninstitutional population in December by 1,510,000, the civilian labor force by 258,000, employment by 216,000, unemployment by 42,000, and persons not in the labor force by 1,252,000. Although the total unemployment rate was unaffected, the labor force participation rate and the employment-population ratio were each reduced by 0.3 percentage point. This was because the population increase was primarily among persons 55 and older and, to a lesser degree, persons 16 to 24 years of age. Both these age groups have lower levels of labor force participation than the general population."

So Rick/Zero Hedge, unless you would like to argue that the population of the United States also grew by 1.5 million in one month (since that is from the exact same report/revision you quoted), I think both of you should retract your extremely misleading statements about those not in the labor force increasing by over a million in January and simply admit that you are either too stupid or too focused on selling a particular world view to read the data correctly.

At the very least, a reputable financial news organization like CNBC needs to set the record straight on data like this as while Mr. Santelli is entitled to his own opinion, he is not entitled to his own facts, and the fact is 1 million people did not drop out of the labor force in January 2012.

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Papademos Threatens To Resign

The Greek Prime Minister, Lucas Papademos, has threatened to resign if the leaders of the parties backing his interim government don’t agree to the new financing plan imposed by the Troika.

This being Greece you can be sure that if something can go wrong, then it will go wrong!

Oh, and by the way, the Greeks are denying that Papademos has threatened to resign.

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Employment, Con't

From the BLS

The average workweek for all employees on private nonfarm payrolls was unchanged in January. The manufacturing workweek increased by 0.3 hour to 40.9 hours, and factory overtime increased by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours. (See tables B-2 and B-7.)

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees edged up by 2 cents, or 0.1 percent, to $19.62. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000. Monthly revisions result from additional sample reports and the monthly recalculation of seasonal factors. The annual benchmark process also contributed to these revisions.

I'll let the report speak for itself --but the above is also great news.

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Employment Up 243,000; Unemployment Down to 8.3%

From the BLS:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.

First -- those are some very nice headline numbers.  Let's look at the details"

Professional and business services continued to add jobs in January (+70,000). About half of the increase occurred in employment services (+33,000). Job gains also occurred in accounting and bookkeeping (+13,000) and in architectural and engineering services (+7,000).

Over the month, employment in leisure and hospitality increased by 44,000, primarily in food services and drinking places (+33,000). Since a recent low in February 2010, food services has added 487,000 jobs. In January, health care employment continued to grow (+31,000). Within the industry, hospitals and ambulatory care services each added 13,000 jobs.

Wholesale trade employment increased by 14,000 over the month. Since a recent employment low in May 2010, wholesale trade has added 144,000 jobs.

Employment in retail trade continued to trend up in January. Job gains in department stores (+19,000), health and personal care stores (+7,000), and automobile dealers (+7,000) were partially offset by losses in clothing and clothing accessory stores (-14,000). Since an employment trough in December 2009, retail trade has added 390,000 jobs.

In January, employment in information declined by 13,000, including a loss of 8,000 jobs in the motion picture and sound recording industry.

In the goods-producing sector, manufacturing added 50,000 jobs. Nearly all of the increase occurred in durable goods manufacturing, with job growth in fabricated metal products (+11,000), machinery (+11,000), and motor vehicles and parts (+8,000). Durable goods manufacturing has added 418,000 jobs over the past 2 years.

Employment in construction increased by 21,000 in January, following a gain of 31,000 in the previous month. Over the past 2 months, nonresidential specialty trade contractors added 30,000 jobs.

Mining added 10,000 jobs in January, with most of the gain in support activities for mining (+8,000). Since a recent low in October 2009, mining employment has expanded by 172,000.

Government employment changed little in January. Over the past 12 months, the sector has lost 276,000 jobs, with declines in local government; state government, excluding education; and the U.S. Postal Service.

The gains are widespread -- a very positive development, as it indicates the economy is starting hit on all cylinders.  

Short version 7.5 on a scale of 10.   Good news all around.

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NDD here with a few observations as well.

I'd rate the report even better, maybe an 8.5.  For once good headline numbers were matched by great internals:

  -  manufacturing workweek (leading indicator) up 0.3 to 40.9
  -  manufacturing employment up 50,000!
  -  overtime up 0.1 hour to 3.4
  -  construction employment up 21,000
  -  employment to population ration up to 58.5%
  -  November and December revised up by 60,000
  -  2011 as a whole revised up by 140,000
  - aggregate hours up 0.2 to 95.5
  - average hourly earnings up 0.2%
  - U-6 unemployment down 0.1% to 15.1%
  -  household survey numbers even stronger:  +631,000 jobs, -381,000 unemployed

These are great internals and exactly what we want to see.  The only negative is that the report still isn't good enough to make a serious dent in the number of jobs we need to recover to 2007 levels on a population adjusted basis -- for that we need over 300,000 a month.

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Morning Market Analysis

The above three charts illustrate the importance of looking at all the equity markets.  The top chart (the SPYs) 60 minute chart could lead to the conclusion that stocks are losing their upward momentum.  However, the bottom two charts (the NASDAQ and Russell 2000) show prices moving above previously established highs.  This gives us an indication we'll probably see prices continue to move higher, as the IWMs and QQQs are the riskier averages.

Gold is still in a rally.  Prices have advanced through the 102 level (which they did when the Fed announced its long-term interest rate decision) and have continued to move higher.  All the shorter EMAs are advancing with the shorter above the longer.  The MACD is also very bullish.

The dollar -- while still moving lower -- is finding support at the 200 day EMA.  However, don't expect this level to hold; the Fed's decision is long-term dollar negative and the euro is catching a bid.

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On Again Off Again - The Greek Farce Continues

As another week of rumour and counter rumour about an "imminent" deal on the Greek haircut comes to a close, the usual rumourmongers from the EU and Greece are proactively spinning that the "deal" is almost done.

However, a much rumoured meeting of EU finance ministers (in which the deal is to be discussed) appears to be in "on again/off again" mode.

The EU recognises that the meeting (allegedly next Monday) cannot take place until the "deal" is signed off. Therefore, displaying a lack of confidence in the hype over an "imminent" signing, the EU has said it expects finance ministers to meet when there is clarity on the Greek PSI debt swap (it will not confirm a date for the meeting).

This time next week we will still be awaiting the "imminent" signing of the "deal"!

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Bonddad Linkfest

1. Analysts abandon their bearish bets (BB)
2. Bank stocks are a buy (Dragonfly Capital)
3. Oil at 6-week low (BB)
4. Car sales off to strong start (Carpe Diem)
5. Asian rally may be sustainable based on technical analysis (BB)
6. ISM index shows declining price pressures (Bespoke)
7. China heading for hard landing (BB)
8. US Treasury spread at 4 month high (BB)
9. Retirement and the labor force participation rate (Chicago Fed)
10. Manufacturing indexes show rebound/strength (FT)

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1953 Employment and Wages

The recession that started mid-year was (obviously) a very negative development for employment.

However, the unemployment rate didn't start moving higher until the fourth quarter, with a big spike in both November and December.

The big reason for the drop is the huge cratering of goods-producing jobs, which declined by more than 700,000 over the course of the year.

Service producing industries followed s somewhat different trajectory.  First, we see increases from January until October, but a pretty sharp drop in November and December.

And overall, we see a drop in government employment, largely as a result of the drop in defense spending related to the Korean war cease-fire.

As a result of the weakening employment picture, real DPI took a hit.

On a continuously compounded annual rate of change basis, real DPI contracted in the third and fourth quarter of 1953

Which we all see in absolute values above.

Below are the graphs from the Economic Report to the President

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Schaeuble Says Nein!

Wolfgang Schäuble, Germany's finance minister, has just said no to adding another Euro15BN to Greece's second bailout (the Troika have discovered a Euro15BN black hole) noting that Germany's part in the stabilisation of Greece is "sufficient".

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15BN Euro Black Hole Found in Greece

The Troika has have discovered that Greece needs an extra Euro15BN on top of the Euro130BN second bailout that it has yet to receive.

This black hole is hardly surprising, as I noted in October last year Greece is a busted flush!

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