“Our thinking was in line with what the BLS determined in the November employment report, that Hurricane Sandy did not have a significant” impact on the jobs numbers,” wrote Zentner after the report.
The strong headline number, however, may belie what’s really going on.
“The BLS has set a rather high hurdle for an employee to not be counted as working. Essentially, if a worker was paid for even one hour of work during his/her pay period that includes the 12th, then they are counted as employed,” she wrote.
We also can’t ignore the revisions to previous numbers.
“Despite the better-than-expected job growth in November, a net downward revision to prior months of nearly 50k should temper market elation,” wrote Zentner. “The 12-month moving average of jobs growth has moved sideways this year, at 150k, which is roughly the average monthly amount need to maintain a fairly steady unemployment rate.”
Here’s a chart demonstrating the sideways trend:
Zentner also had a bearish take on the unemployment rate:
The unemployment rate did decline in November, but for the “wrong” reasons as US households reported job losses and the labour force shrank. We think it’s important to note, however, that the household survey was conducted one week earlier than usual (as is typical every November) so households were asked about labour market conditions in the week immediately following Hurricane Sandy. This means household employment is likely to snap back in December.
Futures jumped after the report and remain near their highs of the morning.