Jobs growth disappoints, but jobless rate falls

Statisticians appear to be using the birth/death model (BDM) to support job growth. It's an old trick. The table below shows that the birth/death model contributed 61,000 jobs in October 2010. This contribution jumped to 102,000 jobs by October 2011. Monthly job growth for October in 2010 and 2011 were 171,000 and 80,000, respectively. We’ll have to wait until year end to see if this increased reliance holds since differences in seasonal adjustments don’t allow for monthly subtraction of the nonfarm payrolls by the BDM.

Birth/Death Model Table:


The following chart illustrates an extremely weak labor market despite the highly touted economic recovery.

Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost):


Headline: Jobs growth disappoints, but jobless rate falls

(Reuters) - Employers hired fewer workers than expected in December and a surprisingly large number of people gave up searching for work, tempering the positive news of a big drop in the unemployment rate.

The disappointing jobs growth figure reported by the Labor Department on Friday suggested the Federal Reserve would likely stay the course with its effort to support the world's biggest economy with the purchase of $600 billion in government bonds.

The department's survey of nonfarm employers showed payrolls increased 103,000 last month, below economists' expectations for 175,000. Private hiring rose 113,000, while government employment fell 10,000.

"What we are seeing is a pace of hiring that is enough to keep us on track, where we stand, which has been a moderate recovery, but not really enough to point to an acceleration from here," said Julia Coronado, a senior economist at BNP Paribas in New York.

Disappointment over the employment gains and a court ruling in a key foreclosure case resulted in a marginal drop in U.S. stock indexes, while prices of safe-haven U.S. government debt rose. The dollar advanced against a basket of currencies.

Source: reuters.com