September Jobs Report Even Weaker Than It Appears – Ep. 201

The Peter Schiff Show Podcast

This morning the government released the most important, the most highly-anticipated economic release of the month At least that's what everybody who trades in just about any market believes And that is the Non-Farm Payroll Report; the official scorecard on job creation and unemployment This time it was for the month of September, the final month of Q3 We're still waiting for the GDP estimate for Q3 By the way the Atlanta Fed, which continues to do the interest rate limbo, lowered the bar again today on the Q3 GDP, which was 3.8% a month ago, when Janet Yellen talked about how the case for a rate hike had been strengthening As of today, the Atlanta Fed is down to 2.1% Politically, they are still trying to keep the estimate above 2%, although by the data, I expect it to be south of 2% The important news today was the jobs number; People were looking for a strong report, I think the consensus was around 170,000, but most people were talking 190 - 200,000, some people were looking for a number north of 200,000 We got 156,000 jobs, which was below expectations, but a little better than the prior month Originally reported at 151,000 but was revised up to 167,000 So now, based on the revised number, it's actually worse than the prior month Even though they revised the prior month up, they revised the month prior to that down, so the net effect of the revision was a decline The unemployment rate, expected to hold steady at 4.9 actually ticked back up to 5% Average hourly earnings, expected to rise by .3, following a small increase of .1 the prior month came in at .2 Not quite the gain everybody thought This is not a good report, and anybody who thought the Fed was going to hike rates in November, they clearly don't think it anymore In fact, even WSJ reporter Jon Hilsenrath said that today's jobs report took a November interest rate hike off the table I would suggest that a November rate hike was never on the table To the extent it was there, it was only in the imaginations of people like Hilsenrath Hilsenrath says now, if the Fed is going to move, it won't be until December, but it's not a sure thing The fact is, the Fed is more likely not to raise rates in December Once again, you need to know the rest of the story, as Paul Harvey used to say, when it comes to the jobs numbers Because the headline doesn't really tell the story You always have to look beneath the surface, which nobody wants to do, except for myself, and a few guys over at Zero Hedge They always do a good job of pointing out what's really going on in the jobs market Number one: The big news was the net creation of part-time-jobs I've been saying this for a long time that the big story is that we are replacing full-time jobs with part-time jobs Employers need more part-time workers than full-time workers because each one works fewer hours We're always going to have net job creation when you are transforming the economy from full-time to part-time employment That was clearly the case this last month According to the Household Survey, we lost 5,000 full-time jobs in September and added 430,000 part-time jobs I would venture to guess that pretty much all of the net increase from August to September, 150,000 or so jobs, is in part-time work If you look at the large jump in employees holding down multiple jobs - the government reports that There was a big jump in September in the number of Americans who have more than one job So obviously what's happening is that people with one job are getting a second job and people with 2 jobs are getting a third These will obviously be more part-time jobs Also look at the composition of the jobs, where were they created? Health care, education, retail trade, leisure and hospitality, temporary help We lost 13,000 manufacturing jobs We lost jobs in transportation and warehousing We were flat in mining