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Another big day of data:

  • The non-farm payrolls report disappointed in a big way with just 39,000 new jobs and a jump in the unemployment rate to 9.8%.  Econoday detailed the poor results:

“Today’s employment report stands out-unfortunately as a stray from the other good news this week. Payroll growth for November was unexpectedly soft and the unemployment rate rose. Payroll employment in November increased a soft 39,000, following a revised 172,000 boost in October and a 24,000 dip in September. The latest figure fell short of the median forecast for a 168,000 advance. The September and October revisions were net up 38,000. Private sector payrolls increase 50,000 in November, following a 160,000 boost the month before.

Weakness in the latest month was in goods-producing and government sector jobs. Good-producing employment declined 15,000, following a 3,000 rise in October. In the latest month, manufacturing fell 13,000; construction slipped 5,000; and mining rose 4,000.

Private service-providing gained 65,000 after a 157,000 increase in October. Within private services for November, professional & business services gained 53,000; health care rose 23,000 jobs; and leisure & hospitality increased 11,000. On the downside, retail trade fell 28,000.

Government jobs fell 11,000 after a 12,000 increase in October. The decrease reflects continued budget cutting at the local level. For the latest month, local government employment declined 14,000 with 4,000 in education and 10,000 in non-education. State government employment edged up 1,000 while federal jobs grew a mere 2,000.

Average hourly earnings were flat in November after rising 0.3 percent the prior month. The latest figure came in below the consensus projection for a 0.2 percent increase. The average workweek for all workers was unchanged at 34.3 hours, equaling expectations for 34.3 hours.

On a year-ago basis, overall payroll job growth slipped to up 0.6 percent in November from up 0.7 percent the prior month.

Turning to the household survey, the unemployment rate bumped up to 9.8 percent from 9.6 percent in October, topping analysts’ forecast for 9.7 percent. The November rise reflected a 276,000 drop in household employment, a 276,000 jump in the unemployed, and a 103,000 increase in the civilian labor force.

The latest employment situation report clearly is disappointing. However, it very much is a curiosity as it is a stark contrast with the recent string of good economic news. There are several theories about November’s sluggishness. First, businesses are still reluctant to hire despite improved demand. Second, the ADP report earlier this week showed strength in hiring by small businesses. This sector is a weak point in the government survey for payrolls and could improve with revisions. In fact, the BLS is starting to update its establishment birth/death factors on a quarterly basis for January 2011 data for release in February. Finally, there could be seasonal adjustment problems with hiring around the holidays. Traders are scratching their heads over whether the jobs report is an aberration from other economic news or whether the other economic news was a temporary head fake.”

  • The ISM services report was in-line with expectations at 55.  There was noticable improvement in employment, new orders and inventories (via ISM)

“Economic activity in the non-manufacturing sector grew in November for the 11th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. “The NMI (Non-Manufacturing Index) registered 55 percent in November, 0.7 percentage point higher than the 54.3 percent registered in October, and indicating continued growth in the non-manufacturing sector at a slightly faster rate. The Non-Manufacturing Business Activity Index decreased 1.4 percentage points to 57 percent, reflecting growth for the 12th consecutive month but at a slower rate than in October. The New Orders Index increased 1 percentage point to 57.7 percent, and the Employment Index increased 1.8 percentage points to 52.7 percent, indicating growth in employment for the third consecutive month and the fifth time in the last seven months. The Prices Index decreased 5.1 percentage points to 63.2 percent, indicating that prices increased slower in November. According to the NMI, 10 non-manufacturing industries reported growth in November. Respondents’ comments mostly reflect cautious optimism. There is a degree of uncertainty that still remains for some industries and companies.”

  • Factory orders disappointed just slightly to -0.9% versus expectations of -0.8%.

All in all the job’s report is setting the tone for the markets.  Despite a huge rally in the Euro today the equity markets are struggling to stay positive due to the realization that the US economy just isn’t that strong.

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