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Global Outlook

Payroll Data

May 9, 2014, Friday, 05:18 GMT | 00:18 EST | 08:48 IST | 11:18 SGT
Contributed by eResearch

The market had waited on Friday's non-farm payroll (NFP) data for several days - then ignored it. When released, everyone was shocked at the much higher than expected number, but there was more to the story. Most of the increase was due to people simply dropping out of the work force, which is probably why the market could not sustain a rally on Friday.

A blog on ZeroHedge nailed the situation, so I thought I would bring it to your attention...

And so the BLS is back to its old data fudging, because while the Establishment Survey job number was a whopper, and the biggest monthly addition since January 2012, the Household Survey showed an actual decline of 73K jobs. What is much worse, is that the reason the unemployment rate tumbled is well-known: it was entirely due to the number of Americans dropping out of the labor force. To wit, the labor force participation rate crashed from 63.2% to 62.8%, trying for lowest since January 1978!

And why did it crash so much - because the number ofpeople not in the labor force soared to 92 million, the second highest monthly increase ever, or 988K, only 'better' than January 2012 which, curiously, was the one month when the establishment survey reported a 360K "increase" in jobs. End result: the number out of the labor force is now an all-time high 92 million, and the labor force tumbled by 800K to 155.4 million from 156.2 million as the delayed effect of the extended jobless benefits ending finally hits.

What is most amusing is that the "persons who currently want a job" was unchanged at 6,146K -even the BLS said it was "puzzled why so many unemployed people are not looking for jobs."

We have some ideas and, no, they do not include the addition of 234K "birth/death adjustment" jobs.

After a strong beat on the NFP employment numbers, the markets had one of the weakest trading employment report days that I have ever recalled. With flat trading all throughout the session, the markets grinded higher with spouts of hard selling sprinkled during the day. With the market closing in negative territory, the biggest thing I took from Friday was the light conviction and participation. Maybe this is attributed to the geo-political situation heating up. It could be due to the mix up of economic data lately. Maybe it was the 10b throttle the FOMC laid out again this week. Frankly, we will have to see how the markets settle up over the weekend, and how we will open up on Monday. That can lead to a sustained move for the week, but frankly we have been swinging back and forth in the markets. We shall see what is in store for us, and hopefully we can get a nice wake-up call in the markets.