As I said last week I suspected the jobs number would be higher than forecast and relatively a good number. April is notorious for overstating jobs growth or understating decline. It appears that the discrepency was even worse than I thought it would be.
From Up and Down Wall Street (you should know that this column has been and continues to be bearish)
NO NEED TO WAIT FOR THE LAST BALLOT to be counted -- it's all over but the shouting. This is not -- repeat, not -- a prediction about the outcome of the election or even the pillow fight between Hillary and Obama. We're talking instead about something much more important, namely, who'll get the Pulitzer Prize for Fiction.
The winner hands down, we fearlessly forecast, will be that brilliant narrative confected by, of all people, the Bureau of Labor Statistics, and published just last Friday under the deceptively bland title "The Employment Situation: April 2008." Although we're loath to deprive you of even a modicum of the thrill of devouring this marvelous work of magic realism by revealing too much of its contents, rest assured it's carefully designed to leave you with a comfy feeling in these rather trying times.
No doubt you've already gleaned the beaming news that instead of the 75,000-80,000 or even greater job losses and higher unemployment rate that the soothsayers were prognosticating, payrolls last month were trimmed by a much more modest 20,000, and the unemployment rate dipped to 5%, from 5.1%. Hallelujah! It's such a happy contrast to those nasty expectations and to the 81,000 jobs that vanished in March.
What makes the report all the more extraordinary is that it comes in the face of otherwise dismal dispatches from the employment front. Layoffs last month, according to Challenger Gray & Christmas, the placement firm, tallied 90,015, a hefty 68% greater than in March. New claims for unemployment insurance in the last full week in April rose to 380,000, from 345,000 the week before, while continuing claims topped the three million mark. Monster, the online want-ad outfit, reported a 6% drop in its April index compared with the same month a year ago, and the Conference Board's help-wanted index sagged to a new low while its measure of employment opportunities showed, not surprisingly, jobs are ever-harder to come by.
The BLS report, then, was like a burst of sunshine dispelling the gloom. So we take this occasion to tip our hat to the bureau's artistry in being able to fashion a comparatively heartening picture of the job market out of some very unpromising raw material. The populace, as recent soundings make clear, is plenty uneasy and disgruntled about the stumbling economy, feeling the pinch and worried about a paycheck; so anything that can provide a lift to sagging spirits is more than welcome.
Actually, the praise really belongs to the unknown (at least to us) and certainly unsung numbers-bender who crafted the so-called birth/death adjustment, supposedly created to capture the additional jobs of firms too new to be captured by the survey. As it has demonstrated time and again, it's much more a product of the imagination than of dull data, as, of course, any worthwhile work of fiction is.
We have on occasion pointed out the contribution the birth/death adjustment has made to the payroll total, but we have trouble remembering when the additional slots it conjured up were anywhere near as massive as they were in the April reckoning, when it "generated" 267,000 jobs. Put another way, ex the adjustment, last month's job loss would have ballooned to 287,000. Bit of a difference, eh?
Just one illustration points up the, shall we say, peculiarity of what the BLS adjustment has wrought. According to the birth/death model, 8,000 jobs were added in April -- are you sitting down? -- in the financial sector. Which, we assume, will come as a stunning surprise to the gosh knows how many poor souls who have been laid off by the banks, the brokerage houses and the rest of the not-very-robust financial fraternity. Must be something really wrong with our vision, moreover, since new firms in that sector appear to be conspicuous by their absence.
As Philippa Dunne and Doug Henwood, the very bright bulbs who run The Liscio Report, point out -- though they usually view the birth/death model more kindly than we do -- among the stranger additions made via its agency in the April report was the 45,000 to construction jobs. (In case you've been vacationing on the moon, construction is not exactly booming.)
They also suggest that the 83,000 new slots supposedly created in the leisure and hospitality field is definitely suspect. "With vacation plans at near-record lows and restaurants reporting reduced traffic," they feel many of these supposed job gains could simply disappear come the next benchmark revision.
After reviewing the defects in the household version of last month's employment trends, Philippa and Doug warn, "given all its internal blemishes," it would be wrong to conclude from the April report that the economy and the job market are stabilizing. And they caution, "An economy providing lots of part-time jobs to the young and few full-time jobs to the prime-aged" is an economy that could have a tough time "sustaining life."