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September 07, 2007

Moonbats Active Again in Massive Jobs Disaster
by Mike Shedlock

Two days ago in Mass Layoffs Soar I proposed "One of these months there is going to be a massive "unexpected" downward jobs revision. More than likely that will be used as an excuse by the Fed to cut (or further cut) rates. It won't help."

So Soon?

The August BLS Employment Situation Report shows that "One of these months" has already arrived.

Nonfarm payroll employment was essentially unchanged (-4,000) in August, and the unemployment rate remained at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the last 3 months, total payroll employment changes have averaged 44,000 per month and private sector employment changes have averaged 72,000 per month (as revised). In August, employment in manufacturing, construction, and local government education declined, while job growth continued in health care and food services.

Participation Rate Sinks to 65.8%

How does the BLS hold the unemployment rate low with such pathetic numbers? The answer is of course the participation rate.

"In August, the civilian labor force edged down to 152.9 million, and the labor force participation rate decreased to 65.8 percent. The declines were largely due to a drop in labor force participation among teenagers; their participation rate fell to 39.7 percent."

Well participation rates can't go negative so this source of nonsense will eventually have to stop.

Household Survey Data

The unemployment rates is based on the Household Survey. Notice how 340,000 civilian jobs were lost and total employment fell by 316,000 jobs, but magically unemployment fell by 24,000. Raise your hand if that makes sense to you.

Establishment Survey Data

The establishment data (actual payroll tax data) shows 4,000 jobs were lost in August. The number is actually far weaker than that. So let's take a look.

A whopping 64,000 goods producing jobs were lost. Making up that total was the loss of 46,000 manufacturing jobs and 22,000 construction jobs.

Manufacturing Losses Were Widespread

• motor vehicles and parts (-11,000)
• machinery (-7,000)
• wood products (-7,000)
• furniture and related products (-4,000)
• semiconductors and electronic components (-4,000)
• apparel (-4,000)
• textile mills (-2,000)

And we are told that manufacturing is "recovering". Where, on Mars?

Massive June/July Job Revisions

• June payroll employment was revised lower to +69,000.
• July was revised lower to +68,000.
• June payroll employment was originally reported as +132,000 as noted in Employment on Pluto Rises.
• July employment was originally reported as +92,000 as noted in Martian Economists and BLS Moonbats.

BLS Moonbats Active Again

As bad as that jobs report was, and it is certainly extremely bad, it would have looked even worse had the BLS Moonbats been inactive. The moonbats were anything but inactive.

Birth/Death Chart "Courtesy" of the BLS.

If one is looking for future "unexpected revisions" look no further than the above table. In an environment in which Implode-O-Meter is reporting 149+- Mortgage lender Implosion, and housing activity falling like a rock, the good folks at the BLS with their "model" are reporting more jobs gained due to the birth of businesses than lost to the those going out of business.

The BLS has shown a net gain of jobs added to new businesses in both construction and financial activities seven consecutive months from February through August.

And economists who by the way were expecting a creation of 120,000+- payroll jobs this month (not a loss of 4,000 as reported) will no doubt be surprised again when still more massive downward revisions come.

Please note that one cannot subtract 120,000 birth/death jobs from the total and conclude 124,000 jobs were lost due to the fact that one set of numbers is seasonally adjusted and the other is not. Nonetheless numbers are indeed far worse than appears at first glance if one takes into account "moonbat activity".

This jobs report was nothing short of a disaster.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

Copyright © 2005-2008 Mike Shedlock

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