Non-farm payrolls for September were disappointing in just about every way – unless you’re Goldman Sachs of course. Payrolls fell 263K for the month while the unemployment rate jumped to 9.8%. Analysts were expecting a decline of just 170K. Econoday has the breakdown across industries:
Job losses were widespread in both goods-producing and service-providing sectors. By major categories, goods-producing jobs decreased 116,000 in September, following a 132,000 drop the month before. In the latest month, construction jobs fell 64,000 while manufacturing declined 51,000 and mining slipped 1,000. Service-providing losses, however, surged back to a 147,000 fall, after contracting only 69,000 in August. The drop in service-providing jobs was led by trade & transportation, down 60,000, and by government, down 53,000. Trade was tugged down mainly by retail jobs which fell 39,000. Government weakness was led by the non-education component of local government, down 24,000, as revenue shortfalls have forced job cuts despite fiscal stimulus monies.
The economy has now lost 7.2MM jobs since December of 2007. The fact that we are still seeing 500K+ jobless claims weekly and 200K+ jobs lost every month is staggering for a recession of this length and a clear sign that this isn’t your normal recession.
Wage inflation remains to come in benign – another sign that deflation is still the greater risk to the market.
The big winner on the day, of course, is Goldman Sachs who made a last minute downgrade of the data to -250K (from -200K). This should help their conspiracy followers feel better about their close ties to the government. You’ve gotta start wondering if Goldman hasn’t turned more neutral (or short) on the market after ramping right up to their price target of 1060.
Stocks shouldn’t respond too negatively to the data, however, as this was largely priced in when Goldman Sachs issued their downgrade yesterday.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.