After yesterday’s rough selloff, the markets are heading upward after the release of the October jobs report. By far the most important mover of markets, the report showed Non-farm payrolls rising 166,000 and unemployment steady at 4.7%. However, as much as I would like to take that at face value and run with it, I had to dig deeper into the number.
Not Good
What I found was not good, and I believe the markets are being complacent regarding recession risk. First off, Non-farm payrolls is a constantly “revised” number, which means the data can easily change in the next month or so. But the most troubling part is the decline in manufacturing jobs (-21%) and retail trade (-22%). Even though this was offset by service-providing job growth, with consumer spending accounting for about 2/3 of GDP I think a decline in these areas ahead of the holiday shopping season does not bode well for the economy.
Related Links:
Bureau of Labor Statistics - Oct 2007 Employment Situation
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