Category: zerohedge

So much for the surge in 691,000 full-time jobs in September. One short month later, indicating just what a farce the BLS’s sampling process is, while the algo frenzy-inducing establishment survey showed a gain of 204,000 workers, the household survey had some other ideas. True, the headline household survey number rose by an almost identical 213,000 workers, however it is when trying to foot that number into the actual components, when one gets a headache. Because according to the same survey, a whopping 623,000 full-time workers (supposedly government) lost their jobs in October, nearly offsetting the entire 691,000 gain the month before which it turns out was purely for Obamacare (now hopelessly damaged) optics.

Ok, so to add up to the headline number at least part-time jobs should have soared right? Wrong. Because according to the BLS another 127K part-time jobs were lost in the month, for a total of 750K full- and part-time losses. In other words, the BLS’ random number generator was working on overdrive once again.

Source: BLS

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0WqtWI9KLHk/story01.htm Tyler Durden

The only two charts that matter from today’s distroted nonfarm payrolls report.

First, the labor force participation rate, which plunged from 63.2% to 62.8% – the lowest since 1978!

But more importantly, the number of people not in the labor force exploded by nearly 1 million, or 932,000 to be exact, in just the month of October, to a record 91.5 million Americans! This was the third highest monthly increase in people falling out of the labor force in US history.

At this pace the people out of the labor force will surpass the working Americans in about 4 years.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KyCiH8Anpwg/story01.htm Tyler Durden

If ever there was a more sad indication of just what the Fed’s liquidity hosepipe of exuberance has done to global capital markets, it is this morning’s reaction to a better-than-expected payrolls report. Good news, right? Oh no – not for risk… indicative that a ‘taper’ may be closer than some hoped, bond yields are blowing higher, stocks are dumping, Gold and Silver are tumbling, and the USD is surging. Still think a ‘taper’ is priced in? Still think markets reflect anything but the flow of fed money printing? Think again…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SZJgmJVZuKs/story01.htm Tyler Durden

If ever there was a more sad indication of just what the Fed’s liquidity hosepipe of exuberance has done to global capital markets, it is this morning’s reaction to a better-than-expected payrolls report. Good news, right? Oh no – not for risk… indicative that a ‘taper’ may be closer than some hoped, bond yields are blowing higher, stocks are dumping, Gold and Silver are tumbling, and the USD is surging. Still think a ‘taper’ is priced in? Still think markets reflect anything but the flow of fed money printing? Think again…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SZJgmJVZuKs/story01.htm Tyler Durden

So much for all the fire and brimstone associated with the government shutdown.

• October nonfarm payrolls soar +204,000, nearly double the 120,000 expected.
• Unemployment rate at 7.3%, up from 7.2%.

And just like that, the “Taper talk” is back…

From the report:

Both the number of unemployed persons, at 11.3 million, and the unemployment rate, at 7.3 percent, changed little in October. Among the unemployed, however, the number who reported being on temporary layoff increased by 448,000. This figure includes furloughed federal employees who were classified as unemployed on temporary layoff under the definitions used in the household survey. (Estimates of the unemployed by reason, such as temporary layoff and job leavers, do not sum to the official seasonally adjusted measure of total unemployed because they are independently seasonally adjusted.) For more information on the classification of workers affected by the federal government shutdown, see the box note. (See tables A-1 and A-11.)

Among the major worker groups, the unemployment rates for adult men (7.0 percent), adult women (6.4 percent), teenagers (22.2 percent), whites (6.3 percent), blacks (13.1 percent), and Hispanics (9.1 percent)  showed little or no change in October. The jobless rate for Asians was  5.2 percent (not seasonally adjusted), little changed from a year  earlier. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.1 million in October. These individuals accounted for 36.1 percent of the unemployed. The number of long-term unemployed has declined by 954,000 over the year. (See table A-12.)

The civilian labor force was down by 720,000 in October. The labor force participation rate fell by 0.4 percentage point to 62.8 percent over the month. Total employment as measured by the household survey fell by 735,000 over the month and the employment-population ratio declined by 0.3 percentage point to 58.3 percent. This employment decline partly reflected a decline in federal government employment. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 8.1 million in October. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

* * *

Total nonfarm payroll employment increased by 204,000 in October. Job growth averaged 190,000 per month over the prior 12 months. In October, job gains occurred in leisure and hospitality, retail trade, professional and technical services, manufacturing, and health care. Federal government employment continued to trend down. There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings from the establishment survey. (See table B-1.)
 
Leisure and hospitality employment rose by 53,000 in October. Within the industry, employment in food services and drinking places increased by 29,000, the same as its average monthly gain over the prior 12 months.

Employment in retail trade increased by 44,000 in October, compared with an average monthly gain of 31,000 over the prior 12 months. Job growth was widespread within the industry in October, with gains in food and beverage stores (+12,000), electronics and appliance stores (+10,000), sporting goods and hobby stores (+8,000), general merchandise stores (+8,000), and building material and garden supply stores (+7,000). Clothing and clothing accessories stores lost 13,000 jobs.

Professional and technical services employment rose in October (+21,000) and has grown by 213,000 over the past 12 months. Within the industry, employment in management and technical consulting services rose by 8,000 in October.

Manufacturing added 19,000 jobs in October, with job growth occurring in motor vehicles and parts (+6,000), wood products (+3,000), and furniture and related products (+3,000). On net, manufacturing employment has changed little since February 2013.

Health care employment increased over the month (+15,000). Job growth in health care has averaged 17,000 per month thus far this year, compared with an average monthly gain of 27,000 in 2012.

In October, employment showed little or no change elsewhere in the private sector, including mining and logging, construction, wholesale trade, transportation and warehousing, information, and financial activities.

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What the sell-side expects:

• JP Morgan 75K
• Goldman Sachs 100K
• UBS 100K
• Bank of America 110K
• HSBC 120K
• Barclays 125K
• Citigroup 130K
• Deutsche Bank 130K

What the market expects vis RanSquawk:

Today sees the release of the US nonfarm payrolls and unemployment rate reading for the month of October, during much of which, hundreds of thousands of federal workers were furloughed due to the recent sixteen day government shutdown.

Ahead of the release, it is important to note that those furloughed federal workers are still counted as employed for the purpose of the headline nonfarm payroll reading, given that they received back-pay. However, the unemployment rate is calculated using a survey of households, in which those workers are categorized as unemployed. It is also possible that there may be confusion among furloughed workers over their own employment statuses, which could distort the unemployment figure.

As well as the shutdown’s effect on the collection of data, the Congressional dysfunction is also likely to have dampened investor sentiment during the month of October. This may have had a negative impact on the labour market, and thus affect the payrolls reading.

In terms of other data points, this year’s trend of nonfarm payroll readings has followed a downward path. The delayed September reading, released just two weeks ago, was no different, coming in at 148k versus an expected 180k and last week’s ADP employment change reading followed suit at 130k versus an expected 150k. Yesterday’s expectation-beating third-quarter GDP reading (2.8% vs. Exp. 2.0% Prev. 2.5%) will have been of a too wide date range to account for the shutdown.

 

And then, here is Bank of America why today’s report will be largely meaningless.

The government shutdown means a relatively complicated, soft employment report. We look for a payroll employment gain of just 110,000 for both total and private employment. We also expect a sharp, one-time jump in the unemployment rate to 7.4% in October from 7.2% in September, although it could be higher. An increase in October is likely to disappear in the November report.

This report will be distorted in several ways. First, the establishment and household surveys have different ways of classifying workers. In the establishment report, employees are counted as on payroll if they receive pay during the survey week. Furloughed government workers were awarded back-pay during the shutdown, satisfying this definition of employed. Conversely, the household survey classifies furloughed workers as on “temporary layoff,” which means they are recorded as unemployed. Note that the same would be true for a private sector paid furlough. The upshot, however, is that the same federal government employee would be both employed in the establishment survey and unemployed in the household survey. Those exact numbers are unclear, but the jump in unemployment could be anywhere from 250,000 (a 7.4% unemployment rate) to 500,000 (a 7.6% unemployment rate).

The unemployment numbers could be distorted for another reason: data collection began one week later than intended (October 20 instead of 13), but households are asked to report on their employment situation from the original survey week. The BLS has highlighted that “non-sampling error” – basically, people answering the survey incorrectly – could be much higher this month. That would be in additional to the usual sampling error that comes from taking a survey in the first place. According to the BLS, that error is typically plus or minus 90,000 for the monthly change in payroll employment, and plus or minus 0.2% for the unemployment rate. All told, we have much less confidence in these numbers than usual. 

These data challenges also complicate other aspects of the report. The BLS has noted that federal employees who worked fewer than 35 hours during the survey week may be counted as part-time for economic reasons, even though their positions remain full time. On the other hand, the establishment survey estimate of average weekly hours is based only on the private sector. While we see some downside risk to private hours during the shutdown and its aftermath, we expect those to remain steady at 34.5 hours. Similarly, we look for average hourly earnings to grow 0.2% in October, faster than the 0.1% increase in September but in line with the average over the past six months. We won’t know until we see the November employment data whether these various distortions are one-off effects or whether the fiscal drama in October had more persistent effects.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0w5Eh0C4YoA/story01.htm Tyler Durden

What the sell-side expects:

• JP Morgan 75K
• Goldman Sachs 100K
• UBS 100K
• Bank of America 110K
• HSBC 120K
• Barclays 125K
• Citigroup 130K
• Deutsche Bank 130K

What the market expects vis RanSquawk:

Today sees the release of the US nonfarm payrolls and unemployment rate reading for the month of October, during much of which, hundreds of thousands of federal workers were furloughed due to the recent sixteen day government shutdown.

Ahead of the release, it is important to note that those furloughed federal workers are still counted as employed for the purpose of the headline nonfarm payroll reading, given that they received back-pay. However, the unemployment rate is calculated using a survey of households, in which those workers are categorized as unemployed. It is also possible that there may be confusion among furloughed workers over their own employment statuses, which could distort the unemployment figure.

As well as the shutdown’s effect on the collection of data, the Congressional dysfunction is also likely to have dampened investor sentiment during the month of October. This may have had a negative impact on the labour market, and thus affect the payrolls reading.

In terms of other data points, this year’s trend of nonfarm payroll readings has followed a downward path. The delayed September reading, released just two weeks ago, was no different, coming in at 148k versus an expected 180k and last week’s ADP employment change reading followed suit at 130k versus an expected 150k. Yesterday’s expectation-beating third-quarter GDP reading (2.8% vs. Exp. 2.0% Prev. 2.5%) will have been of a too wide date range to account for the shutdown.

 

And then, here is Bank of America why today’s report will be largely meaningless.

The government shutdown means a relatively complicated, soft employment report. We look for a payroll employment gain of just 110,000 for both total and private employment. We also expect a sharp, one-time jump in the unemployment rate to 7.4% in October from 7.2% in September, although it could be higher. An increase in October is likely to disappear in the November report.

This report will be distorted in several ways. First, the establishment and household surveys have different ways of classifying workers. In the establishment report, employees are counted as on payroll if they receive pay during the survey week. Furloughed government workers were awarded back-pay during the shutdown, satisfying this definition of employed. Conversely, the household survey classifies furloughed workers as on “temporary layoff,” which means they are recorded as unemployed. Note that the same would be true for a private sector paid furlough. The upshot, however, is that the same federal government employee would be both employed in the establishment survey and unemployed in the household survey. Those exact numbers are unclear, but the jump in unemployment could be anywhere from 250,000 (a 7.4% unemployment rate) to 500,000 (a 7.6% unemployment rate).

The unemployment numbers could be distorted for another reason: data collection began one week later than intended (October 20 instead of 13), but households are asked to report on their employment situation from the original survey week. The BLS has highlighted that “non-sampling error” – basically, people answering the survey incorrectly – could be much higher this month. That would be in additional to the usual sampling error that comes from taking a survey in the first place. According to the BLS, that error is typically plus or minus 90,000 for the monthly change in payroll employment, and plus or minus 0.2% for the unemployment rate. All told, we have much less confidence in these numbers than usual. 

These data challenges also complicate other aspects of the report. The BLS has noted that federal employees who worked fewer than 35 hours during the survey week may be counted as part-time for economic reasons, even though their positions remain full time. On the other hand, the establishment survey estimate of average weekly hours is based only on the private sector. While we see some downside risk to private hours during the shutdown and its aftermath, we expect those to remain steady at 34.5 hours. Similarly, we look for average hourly earnings to grow 0.2% in October, faster than the 0.1% increase in September but in line with the average over the past six months. We won’t know until we see the November employment data whether these various distortions are one-off effects or whether the fiscal drama in October had more persistent effects.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0w5Eh0C4YoA/story01.htm Tyler Durden

Credit Suisse’ head of US rates Carl Lantz previews today’s NFP report from the perspective of one data series that gets virtually zero mention in the media: The Data Collection Rate.

The most important payroll number today (that you never look at)

The Data Collection Rate.

Each month the BLS tells us, buried in an oft-ignored table, what percentage of businesses surveyed returned a response in time for the first payroll print. Despite payrolls remaining an intensively revised number (part of the reason we usually advocate fading an overreaction in the market), this data collection rate has climbed steadily over the years. The attached chart shows the first-print data collection rate for October going back to 1981. Collections have risen from about 40% to above 70% over this period.

If today’s number is to have near-full credibility we should see the collection rate around 74% – the current trend level. It is very likely that this collection rate will be lower due to the technical difficulties in receiving incoming electronic surveys during a period (the government shutdown) when many BLS systems were turned off.

October collections have generally clung to the uptrend seen in the chart with the notable exception in 2001 where presumably disruptions related to the 9/11 attacks had an impact on collections. The ultimate revision to this number was +88k.

Another big drop occurred after huricane Katrina. Collections were well below trend in the autumn of 2005. The worst collection rate then was in November 2005 (presumably lagged effects of business disruptions) and the ultimate revision from the first payroll print was +120K.

While payrolls should be much “cleaner” than the u-rate as furloughed government workers will be counted as employed in the former but not the latter, we need to look at the data collection rate to see just how clean this dirty shirt actually is.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/kVKlhltDwdE/story01.htm Tyler Durden

If last year it was the East Coast’s turn to suffer a freak super storm, this year it is the already battered Philippines, which suffered a 7.2 magnitude earthquake last month, turn as Super Typhoon Haiyan, the equivalent of a Category 5 hurricane, slammed into the Philippines today after forcing thousands of people to evacuate. With sustained winds of 315 kph (195 mph) and gusts as strong as 380 kph (235 mph), Haiyan was probably the strongest tropical cyclone to hit land anywhere in the world in recorded history. “If it maintains its strength, there has never been a storm this strong making landfall anywhere in the world,” said Jeff Masters, founder of Weather Underground in Ann Arbor, Michigan. “This is off the charts.” Not taking chances, the local government has ordered over 125,000 people from 22 provinces to evacuate.

But while luckily human lives will be saved, little else may be. As Bloomberg reports, “Haiyan may inundate rivers, create mudflows and cause storm surges as high as 6 meters (20 feet), Aquino said. Three air force cargo planes, 2 navy ships, helicopters and relief boats are on standby, the president said. About 78,000 families were evacuated in Albay province, Governor Joey Salceda said on his Facebook account. Masters said Tacloban, the capital of the Philippine province of Leyte, would take a direct hit and winds of at least 130 mph may sweep as far as 100 miles inland. “There isn’t much built on the Philippines that can withstand winds like that,” Masters said.

Moments ago Bloomberg just blasted that up to half of the island chain’s sugar cane may be destroyed as a result of the Typhoon, which will wreak havoc on logistic and supply chains globally across numerous commodities. However, it is the human damange that is the biggest threat.

Heavy rains from storms usually cause the highest death tolls on the Philippines, Masters said. Flooding may not be the worst threat this time because Haiyan is moving fairly fast. The high winds and storm surge have the potential to cause catastrophic damage, he said.

 

“We’re swamped with calls for help,” Southern Leyte Governor Roger Mercado said in an interview over DZMM radio. Strong wings uprooted trees in the province, he said.

 

About 2,000 passengers, 50 vessels and 557 rolling cargoes are now stranded in various seaports, the disaster agency said today. Cebu Air Inc. (CEB), the nation’s largest budget carrier, canceled 122 domestic flights and 4 international flights from today to Nov. 9, it said yesterday. Philippine Airlines Inc., in its Facebook account, said 26 local flights and three international flights have been canceled today.

Putting the size of the storm in perspective: “Haiyan was so large in diameter that at one point, its clouds were affecting two-thirds of the country, which stretches more than 1,850 kilometers (1,150 miles). Tropical-storm-force winds extended 240 kilometers from the typhoon’s center.

The wide angle shot below by EUMETSAT shows just how massive the typhoon truly is:

In short a record superstorm:

The true power of Haiyan isn’t known because reconnaissance planes haven’t flown into it, Masters said. The strongest tropical cyclone on record was Super Typhoon Nancy in 1961 with top winds of 215 mph. He said many believe the estimated wind speeds of storms between the 1940s to 1960s was too high.

 

Since 1969, only three storms have been as powerful as Haiyan, Masters wrote on his blog. They were Super Typhoon Tip in 1979 in the Pacific and Atlantic hurricanes Camille in 1969 and Allen in 1980.

 

The strongest storm to hit land was Camille, which went ashore in Mississippi with winds near 195 mph, Master said. While there are some estimates that Camille’s winds were closer to 200 mph, the exact speed is unknown because the instruments were destroyed, according to the U.S. National Hurricane Center.

This is just the beginning. After it is done with the Philippines, Haiyan is expected to strike Vietnam in several days, according to the Japanese Meteorological Agency.  “It is going to be a huge problem for Vietnam and Laos,” Masters said. As much as a foot of rain may fall there, he said.

If there is a silver lining to all the imminent destruction and tragedy, it is that Q4 GDP in the region will be off the charts. Just as Krugman.

Below is CNN with a video summary on the ground.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/O79YH5779t4/story01.htm Tyler Durden

If last year it was the East Coast’s turn to suffer a freak super storm, this year it is the already battered Philippines, which suffered a 7.2 magnitude earthquake last month, turn as Super Typhoon Haiyan, the equivalent of a Category 5 hurricane, slammed into the Philippines today after forcing thousands of people to evacuate. With sustained winds of 315 kph (195 mph) and gusts as strong as 380 kph (235 mph), Haiyan was probably the strongest tropical cyclone to hit land anywhere in the world in recorded history. “If it maintains its strength, there has never been a storm this strong making landfall anywhere in the world,” said Jeff Masters, founder of Weather Underground in Ann Arbor, Michigan. “This is off the charts.” Not taking chances, the local government has ordered over 125,000 people from 22 provinces to evacuate.

But while luckily human lives will be saved, little else may be. As Bloomberg reports, “Haiyan may inundate rivers, create mudflows and cause storm surges as high as 6 meters (20 feet), Aquino said. Three air force cargo planes, 2 navy ships, helicopters and relief boats are on standby, the president said. About 78,000 families were evacuated in Albay province, Governor Joey Salceda said on his Facebook account. Masters said Tacloban, the capital of the Philippine province of Leyte, would take a direct hit and winds of at least 130 mph may sweep as far as 100 miles inland. “There isn’t much built on the Philippines that can withstand winds like that,” Masters said.

Moments ago Bloomberg just blasted that up to half of the island chain’s sugar cane may be destroyed as a result of the Typhoon, which will wreak havoc on logistic and supply chains globally across numerous commodities. However, it is the human damange that is the biggest threat.

Heavy rains from storms usually cause the highest death tolls on the Philippines, Masters said. Flooding may not be the worst threat this time because Haiyan is moving fairly fast. The high winds and storm surge have the potential to cause catastrophic damage, he said.

 

“We’re swamped with calls for help,” Southern Leyte Governor Roger Mercado said in an interview over DZMM radio. Strong wings uprooted trees in the province, he said.

 

About 2,000 passengers, 50 vessels and 557 rolling cargoes are now stranded in various seaports, the disaster agency said today. Cebu Air Inc. (CEB), the nation’s largest budget carrier, canceled 122 domestic flights and 4 international flights from today to Nov. 9, it said yesterday. Philippine Airlines Inc., in its Facebook account, said 26 local flights and three international flights have been canceled today.

Putting the size of the storm in perspective: “Haiyan was so large in diameter that at one point, its clouds were affecting two-thirds of the country, which stretches more than 1,850 kilometers (1,150 miles). Tropical-storm-force winds extended 240 kilometers from the typhoon’s center.

The wide angle shot below by EUMETSAT shows just how massive the typhoon truly is:

In short a record superstorm:

The true power of Haiyan isn’t known because reconnaissance planes haven’t flown into it, Masters said. The strongest tropical cyclone on record was Super Typhoon Nancy in 1961 with top winds of 215 mph. He said many believe the estimated wind speeds of storms between the 1940s to 1960s was too high.

 

Since 1969, only three storms have been as powerful as Haiyan, Masters wrote on his blog. They were Super Typhoon Tip in 1979 in the Pacific and Atlantic hurricanes Camille in 1969 and Allen in 1980.

 

The strongest storm to hit land was Camille, which went ashore in Mississippi with winds near 195 mph, Master said. While there are some estimates that Camille’s winds were closer to 200 mph, the exact speed is unknown because the instruments were destroyed, according to the U.S. National Hurricane Center.

This is just the beginning. After it is done with the Philippines, Haiyan is expected to strike Vietnam in several days, according to the Japanese Meteorological Agency.  “It is going to be a huge problem for Vietnam and Laos,” Masters said. As much as a foot of rain may fall there, he said.

If there is a silver lining to all the imminent destruction and tragedy, it is that Q4 GDP in the region will be off the charts. Just as Krugman.

Below is CNN with a video summary on the ground.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/O79YH5779t4/story01.htm Tyler Durden