As usual the comments on the employment reports reflect dire outcomes. What I have heard few say with respect to the Establishment Survey is the phrase in the report:
“The change in total nonfarm payroll employment for July was revised from +141,000 to +181,000, and the change for August was revised from +96,000 to +142,000.”
These are substantial upward revisions of which few take into account. The link to the pdf of the release is: [www.bls.gov]
I prefer the Household Survey which I refer to as the Household “Employment” Survey (HES) which captures the trend of all employed individuals including those who are self-employed which is not captured by either the Establishment Survey or the ADP Employment reports. It is the HES which is plotted vs. Auto & Light Truck Sales in the chart below. There is a strong correlation between employment and vehicle sales with vehicle sales forecasting employment by 9mos-12mos. The current pace of HES I have estimated at 283,000 per month. September’s vehicle sales which rose to 14.87mil SAAR (Seasonally Adjusted Annual Rate) which indicates that for the next 9mos-12mos now we should experience economic expansion and higher employment. All economic measures are statistical in nature and can never capture with precision an exact count of the trends which they represent.
Expecting to extrapolate from one month’s report vs. last month’s report to next a precise expectation of month’s report has been a task which for years has been fraught with countless failed predictions by forecasters. Even today’s HES report of an increase over last month’s report of 873,000 carries a monthly error of +/-436,000. Three months of error can add to a significant amount. One always needs to keep in mind that the methods used to count employed individuals in the HES are in fact counting the number employed in roughly 310million Americans. The number of those employed provided in today’s report was 142,897,000 individuals working +/- 436,000 or 0.3%, but the actual trend of change can only be seen if one determines the trend over several months which I do in the chart. The trend comes to 3,678,000 new individuals hired over the past 13mos or a rate of ~283,000 new jobs per month. At this pace we are on track to create ~17mill new jobs over the next 5yrs. This is a good pace and can get the US back to historical employment levels of ~48.5% of the population in that timeframe.
Today’s reports are “GOOD NEWS” as far as has been our historical experience. I continue to recommend higher equity exposure in accounts where it is appropriate. I expect stock prices which have risen strongly as market psychology has turned more positive to continue. Volatility will continue as always with the short-term direction dependent on Momentum Traders, but over the long term even these traders should (as history tells us) give way to improved economic activity and equities prices rise with improvements in market psychology.
Track Gurus’ Stock Purchases Daily – Real Time Guru Picks
GuruFocus "Real Time Picks" reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 3 days after the date of the transaction. This is just one of the features provided with GuruFocus Premium Membership.
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC.
Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.