With the Independence Day holiday behind us and a sunny weekend in front of
us, this is going to be a quiet day even by summer-Friday standards. As a result,
the jobs report
which came out this morning is bound to get a large chunk of what little attention
the market is paying to what’s going on. And that’s a pity, since, like most
jobs reports of late, it has increasingly little credibility.
Barry Ritholtz today does a good job of taking
the jobs report apart, saying that a lot of it just doesn’t pass the smell
test, including the 4.5% unemployment rate, the rise in construction employment,
and the boost of 156,000 jobs due to the birth/death adjustment. Calculated
Risk, too, is puzzled.
And, as is increasingly normal on the first Friday of the month, past jobs reports
got revised massively, which should be enough to make traders wonder why they
should take this month’s numbers seriously.
My take on the jobs report is that once upon a time it was useful, but that
nowadays, with a large increase in self-employment and with the margins of error
dwarfing the actual numbers reported, it’s becoming largely irrelevant. The
only useful thing you can do with it is look at it through squinted eyes and
try to discern vague trends: in that respect, one might be able to say that
weakeness in the housing market has not visibly fed through to weakness in the
broader economy, at least as far as employment is concerned. But this report
is far from dispositive: if you think that, contra the report, there actually
is weakness in the US jobs market, you might well be right. With the
quality of statistics we have to work with, there’s simply no way of telling