November’s nonfarm payrolls report is out Friday, and the big news of a dip in the unemployment rate to 8.6% is splashing across the headlines.
Critics, and those planted firmly in the “double-dip” camp, argued that the chief reason for the drop was that 315,000 people left the workforce. The theory goes that if conditions were better, that number would be smaller and unemployment would be higher.
That may be so, says Stuart Hoffman, chief economist at PNC Financial Services, but while the drop in unemployment – to 8.6% from 9% a month ago – may be overstated, it is not in the wrong direction.
Hoffman points to the 287,000 jobs gained in the household portion of the government’s monthly survey as the other side of the unemployment story.
November’s jobs report represents “half of the right way to get unemployment down,” he says, and the composition of the decline means there may be some giveback in the coming months, perhaps to 8.8-8.9%, Hoffman does not expect a complete reversal in December or January.
Equally important in Friday’s jobs report, Hoffman believes, are the breadth of the gains and the revisions to the last few months.
Nonfarm payrolls gained 120,000 jobs in November, with the entirety of the increase coming thanks to a 140,000 increase in private payrolls, with construction one of the few sectors to book a decline and retail a standout at the start of the holiday season with a gain of 50,000 jobs. (See “Jobs Report: Payrolls Add 120K, Unemployment Down To 8.6%.”)
Even more striking is the report is the revision to past months. August, a seemingly brutal month that initially showed a goose egg for job growth, actually saw 104,000 jobs gained, according to the Labor Department. September’s figure was bumped to 210,000 from 158,000 and October was revised up to 100,000 from 80,000.
“As the government gets more complete data, they revise up, and these are big numbers,” Hoffman says.
To be fair to the more pessimistic case there is plenty to be wary of, including the potential impact of Europe’s sovereign debt mess.
The U.S. economy appears to be resilient to the struggles across the Atlantic to this point though, and even more importantly, Hoffman says “resilient to the dysfunction in our own government.”
The failed Supercommittee effort to cut a deal on deficit reduction – “they were more Superzeroes than Superheroes,” Hoffman quips – was just the latest hurdle the economy is fighting to overcome.
Dating back to August the U.S. has fought through the S&P rating downgrade, a surge in market volatility and a drop in consumer confidence. “Despite all of it,” Hoffman says, “the economy is better, holiday shopping is strong and auto sales are up.”
While the pace of recovery is hardly anything to celebrate, even some of the more bearish economists are coming around.
In his daily note Thursday, Gluskin Sheff’s David Rosenberg acknowledged that the U.S. economy may be more “Teflon-like” than he thought when it comes to shaking off the impact of Europe and deficit concerns.
If the recent string of improved data continues into the first quarter of 2012, Rosenberg wrote, “then the recession call is off the table.”
forbes.com
Critics, and those planted firmly in the “double-dip” camp, argued that the chief reason for the drop was that 315,000 people left the workforce. The theory goes that if conditions were better, that number would be smaller and unemployment would be higher.
That may be so, says Stuart Hoffman, chief economist at PNC Financial Services, but while the drop in unemployment – to 8.6% from 9% a month ago – may be overstated, it is not in the wrong direction.
Hoffman points to the 287,000 jobs gained in the household portion of the government’s monthly survey as the other side of the unemployment story.
November’s jobs report represents “half of the right way to get unemployment down,” he says, and the composition of the decline means there may be some giveback in the coming months, perhaps to 8.8-8.9%, Hoffman does not expect a complete reversal in December or January.
Equally important in Friday’s jobs report, Hoffman believes, are the breadth of the gains and the revisions to the last few months.
Nonfarm payrolls gained 120,000 jobs in November, with the entirety of the increase coming thanks to a 140,000 increase in private payrolls, with construction one of the few sectors to book a decline and retail a standout at the start of the holiday season with a gain of 50,000 jobs. (See “Jobs Report: Payrolls Add 120K, Unemployment Down To 8.6%.”)
Even more striking is the report is the revision to past months. August, a seemingly brutal month that initially showed a goose egg for job growth, actually saw 104,000 jobs gained, according to the Labor Department. September’s figure was bumped to 210,000 from 158,000 and October was revised up to 100,000 from 80,000.
“As the government gets more complete data, they revise up, and these are big numbers,” Hoffman says.
To be fair to the more pessimistic case there is plenty to be wary of, including the potential impact of Europe’s sovereign debt mess.
The U.S. economy appears to be resilient to the struggles across the Atlantic to this point though, and even more importantly, Hoffman says “resilient to the dysfunction in our own government.”
The failed Supercommittee effort to cut a deal on deficit reduction – “they were more Superzeroes than Superheroes,” Hoffman quips – was just the latest hurdle the economy is fighting to overcome.
Dating back to August the U.S. has fought through the S&P rating downgrade, a surge in market volatility and a drop in consumer confidence. “Despite all of it,” Hoffman says, “the economy is better, holiday shopping is strong and auto sales are up.”
While the pace of recovery is hardly anything to celebrate, even some of the more bearish economists are coming around.
In his daily note Thursday, Gluskin Sheff’s David Rosenberg acknowledged that the U.S. economy may be more “Teflon-like” than he thought when it comes to shaking off the impact of Europe and deficit concerns.
If the recent string of improved data continues into the first quarter of 2012, Rosenberg wrote, “then the recession call is off the table.”
forbes.com
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