It's not like last Friday's disappointing jobs data needs more folks to point out what a flop it was, but Albert Edwards, the SocGen uber-bear, has an interesting take.

In a research note, he discusses the significance between the divergence between the establishment data and the household survey.

Take a look, via ZeroHedge:

The 85,000 decline in December's non-farm payrolls jolted (briefly) the markets back to reality. For it had almost been forgotten in the post-November payroll euphoria that we remain in the midst of a long-lasting balance sheet recession. Yet surprisingly weak though the December payrolls were, this disappointment pales into insignificance compared with the massive 589,000 decline in employment as measured by the Household Survey (the monthly Employment Report contains surveys of both Households and Company Establishments each month). Typically the employment measure preferred by the markets is the payroll data collected from the Establishment Survey, as it tends to be less volatile on a monthly basis (but the unemployment rate data is derived from the alternative Household Survey).

Although the household measure of jobs is typically more volatile on a month-on-month basis, it is notable how it has seen a far more marginal improvement on a trend basis when compared to the payroll series (see chart below), and just how bad Decembers outturn was.

Which of these indicators should one be following?

Typically, at turning points, the Household Survey measure of employment growth tends to be a leading indicator of the payroll data. Payrolls often get revised much later to fall into line with the Household Survey measure. One key difference between the two surveys is the difficulty the Establishment Survey measure of employment has in picking up what is going on in the smaller company sector. These diverging trends appear to be particularly wide at present (see chart below).

Thus the Friday numbers, far from being a huge shock, were entirely consistent with what we've been seeing for awhile. There's just no recovery at the small business level in terms of sentiment, credit, or hiring. In fact, what these charts show is that there was optimism, and there was a slowdown in firing, but that's stalled, so you can't argue that it's simply a matter of small business not yet having turned the corner, to so speak.

You hear over and over again about how small business is the key to the recovery. Politicians love to say it. Too bad putting that into practice is a different matter entirely.

Read the rest of the report at ZeroHedge -- >