David Rosenberg riffs on this morning's jobs report:

THE HOUSEHOLD SURVEY

To say that the Household survey was horrible would be an understatement.

This survey showed a net job destruction of 589,000, bringing the decline to 1.8

million over the past three months — more than what was lost in the entire 2001

tech-wreck-recession. All of the decline was in full-time employment, and while

the bulls out there will undoubtedly point to the fact that temp agency hirings

are on the rise during the last three months, finding placements for part-time

workers is not a cause for celebration. Certainly not when the number of those

working part-time “for economic reasons” jumped 105,000 or at a 15% annual

rate, as was the case in October.

DIFFUSION INDEX STILL SHOWING WEAKNESS IN PAYROLLS

If there were even nascent signs of an improvement in labour market dynamics,

then we would be seeing the workweek begin to rise. Instead, it stayed at a

record low 33.0 hours last month. We would also see the nonfarm payroll

diffusion index embark on an uptrend, but instead it fell back to a three-month

low of 33.8 from 37.5 in September. The corresponding diffusion index in

manufacturing dropped in October, to 18.1 from 22.9. Therefore, we are trying

our best to wrap our heads around this notion that we are actually in some

durable recovery phase when two-in-three companies are still shedding jobs,

and more than four-in-five are doing so in the manufacturing sector.

FED ON HOLD INDEFINITELY

Fed Chairman Bernanke hinted loudly that any interest rate increases in the

future would be dependant on the path of resource utilization — code for the

unemployment rate. And in October, even in the face of a dip in the labour force

participation rate (which should be going in the opposite direction in a real

recovery), the headline (U3) measure of the unemployment rate still managed to

rise to 10.2% from 9.8% in September — the highest level since April 1983. But

the labour market slack story does not end there — the broader U6 measure

(which marginally attached workers and those working part-time for economic

reasons) soared to an all-time high for the series, to 17.5% from 17.0% in

September. In other words, more than one in six Americans are either

unemployed or under-employed, despite the most dramatic monetary and fiscal

efforts by a government anywhere to reverse a collapse in private sector credit.



