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United States Jobs Report and Hourly Earnings

By: Ian Campbell | Monday, November 5, 2012

While on Friday the U.S. Jobs Report said that 171,000 net new jobs were created in October, that report which you can access here, and other reports say:

Broadly, most reports and commentaries I have read on Friday's U.S. Jobs Report see that report as a positive sign for the U.S. economy. For the following reasons I see what the report says much more as a 'treading water' report, and less as an 'economy recovery' report. My reasons are:

In October, of the total 171,000 net seasonally adjusted jobs reported to have been created, 163,000 of those were reported as having been private sector service jobs.

A further issue with the U.S., or any other country, monthly jobs reports is that they are subject to upward and downward subsequent adjustments. The U.S. October Jobs Report revises previously reported total nonfarm payroll upward by 35% for August (from 142,000 to 192,000), and by 30% for September (from 114,000 to 148,000). These obviously are significant adjustments, leaving one to wonder at the credibility immediately given to the first reported numbers by the financial markets, economists, reporters and commentators. This in circumstances where statistically significant adjustments to 'first reported employment numbers' could be either up or down.

In the twelve months ended October 31, 2012, the report says that a net 1,963,000 total nonfarm payroll jobs have been created in the U.S. - or 163,583 per month. There are any number of calculations as to the number of net new jobs that need to be created each month in the United States simply to keep up with population growth. For example see How Many Jobs Are Needed to Keep Up with Population Growthwhere a number of about 125,000 per month is suggested. That seems to a number others identify with, although some suggest higher numbers.

As with many things, the 'devil is in the detail'. The following table summarizes selected data extracted from Table B-1 of last Friday's U.S. October Jobs Report for "Employees on nonfarm payrolls by industry sector and selected industry detail", with calculated year/year changes and % of private sector jobs created by broad industry sector. All numbers in the table are said to be seasonally adjusted.


Industry Sector
& Government
Reported Jobs
Oct 31, 2012
Growth in Reported
Jobs Last 12 Mths
% Private Sector
Jobs Created
Total Private 111,744,000 1,963,000  
Goods-Producing 18,330,000 224,000 11.4%
Construction 5,539,000 20,000 1.0%
Manufacturing 11,996,000 219,000 11.2%
Service-providing 93,414,000 1,739,000 88.9%
Professional/business 18,007,000 525,000 26.7%
Education/health 20,440,000 414,000 21.1%
Leisure/Hospitality 13,734,000 340,000 17.3%
Total Government* 22,011,000 (14,000)  

*Federal, State and Local


For me, the following things 'jump out of the table' and ought to hit one squarely in the forehead:

all the talk about job creation and economic recovery in America is political rhetoric and meaningless economist-speak - and in the word's of William Shakespeare, 'much ado about nothing'.

All the foregoing in aid of my belief that if you participate in the financial markets you should weight what you listen to and read about U.S. (or any other country) labour and unemployment statistics with at least a 'few grains of salt' in the context of country-specific long-term economic growth.

Topical References: United States Department of Labor, from The Bureau of Labor Statistics, November 2, 2012 - reading time open-ended. Also see:


Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Economic Straight Talk

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at
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