110,000 New jobs, Unemployment up ???

[soko]

Can somebody tell me how this works please?

http://www.thestreet.com/s/jobs-repo...0382962_3.html

"Stocks' gains came after a Labor Department report said that the U.S. economy added 110,000 workers last month, easing, at least momentarily, the worst concerns about the health of the job market."

"As expected, the unemployment rate rose to 4.7% from 4.6%, while average hourly earnings rose 0.4%, slightly above expectations."

Is it something simple I'm missing? How and why are people happy that we added 110,000 jobs last month and yet unemployment still went up .1% ?

[ahnuld]

Because the expectations were for less jobs to be created?

[DcifrThs]

[ QUOTE ]
Can somebody tell me how this works please?

http://www.thestreet.com/s/jobs-repo...0382962_3.html

"Stocks' gains came after a Labor Department report said that the U.S. economy added 110,000 workers last month, easing, at least momentarily, the worst concerns about the health of the job market."

"As expected, the unemployment rate rose to 4.7% from 4.6%, while average hourly earnings rose 0.4%, slightly above expectations."

Is it something simple I'm missing? How and why are people happy that we added 110,000 jobs last month and yet unemployment still went up .1% ?

[/ QUOTE ]

wierd story. unemployement has been at 4.7% for a while.

starting there, that rate is the #people out of work/ # people in the labor force.

so it could go up for a number of reasons (people drop out of labor force etc.).

more importantly though is how the #s come in relative to expectations.

jobless claims came in 317k vs. 310k expected yesterday and today the 110k jobs added were less than the 115k expected.

further, the consensus expectations on UE rate was 4.7% and it came in at that.

it is important to note here though that last month 100k jobs were expected to be added and we LOST 4k.

so the 5k differential of expected vs. actual was small here and we actually added jobs so that is good news relative to last month.

the increased hourly wages though cuts both ways.

first, more wages means more income for consumers.

second, more wages means lower margins for producers and higher possible future inflation (b/c wages are sticky. harder to cut them than to raise them in a tight market, which is what we have now)

the market likely viewed it as VERY good given last month's disappointment.

to get what is expected during these reoprts go to "bloomberg.com" and go to "Market Data" and then "Economic Reprots" or "Economic Data" on that scroll down menu.

hope this helps,
Barron

[soko]

Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[tolbiny]

[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

110,000 18 year olds enter the market. Tada, 10,000 people added to UE rolls. (its not going to be 110,000 18 year olds, there are otherways for those looking for work to be added to UE numbers).

[DcifrThs]

[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

[TheMetetron]

soko,

We are a growing nation. For whatever reason, we need to add in the 150,000 jobs a month range to keep unemployment stable.

[DcifrThs]

[ QUOTE ]
soko,

We are a growing nation. For whatever reason, we need to add in the 150,000 jobs a month range to keep unemployment stable.

[/ QUOTE ]

what about changing labor force participation rates? does that assume LFP is stable?

also where did you get this estimate? i'm assuming that this is either a bls, bea, or fed # so that means that they also break it down to which sectors of the economy need what amount of those monthly employment additions and we can get a better sense of where they come from.

thanks,
Barron

[Phone Booth]

[ QUOTE ]
[ QUOTE ]
Good call on the economic calendar, very interesting.

If I could ask for just a little more clarification for what is confusing me.

If there are 100,000 more jobs than there were last month, how can less people have jobs when we just said that there are 100,000 positions that didn't exist last month.

[/ QUOTE ]

first off, unemployment (like i mentioned above) just (imperfectly) measured the % of the labor force that have jobs.

the labor force can change for a ton of reasons.

visit www.bls.gov and go to unemployment rate to see how it is exactly calculated.

it takes into account discouraged workers (i forget the real term) and drops them out. i.e. if you have stopped looking for a job b/c you couldn't find one you are "not in the labor force"

that may be innaccurate but it is close enough.

basically, just know the UE rate is not a perfect measure. it is like a capacity measure that helps to tell whether we are near the point at which any additional growth will likely be inflationary (like capacity utilization).

to more directly answer your question, there aren't "100k more jobs than there were last month" there are "100k more jobs filled than were filled last month"

so right now, more people have jobs than had jobs last month (yet more people filed for first time unemployment benefits than they did last week/month than expected).

i hope this helps. let me know if i didn't answer your Q.

Barron

[/ QUOTE ]

Also, isn't the unemployment rate from a different survey (household versus payroll)?

[jtollison78]

You might also be interested in the Birth/Death model. I'm not exactly sure how it plays in over the long run, but a lot of people say it's a bit fishy.

http://globaleconomicanalysis.blogsp...ly-flawed.html

John