NON-FARM PAYROLLS PLUMMET, GOLDMAN SACHS WINS AGAIN
Non-farm payrolls for September were disappointing in just about every way – unless you’re Goldman Sachs of course. Payrolls fell 263K for the month while the unemployment rate jumped to 9.8%. Analysts were expecting a decline of just 170K. Econoday has the breakdown across industries:
Job losses were widespread in both goods-producing and service-providing sectors. By major categories, goods-producing jobs decreased 116,000 in September, following a 132,000 drop the month before. In the latest month, construction jobs fell 64,000 while manufacturing declined 51,000 and mining slipped 1,000. Service-providing losses, however, surged back to a 147,000 fall, after contracting only 69,000 in August. The drop in service-providing jobs was led by trade & transportation, down 60,000, and by government, down 53,000. Trade was tugged down mainly by retail jobs which fell 39,000. Government weakness was led by the non-education component of local government, down 24,000, as revenue shortfalls have forced job cuts despite fiscal stimulus monies.
The economy has now lost 7.2MM jobs since December of 2007. The fact that we are still seeing 500K+ jobless claims weekly and 200K+ jobs lost every month is staggering for a recession of this length and a clear sign that this isn’t your normal recession.
Wage inflation remains to come in benign – another sign that deflation is still the greater risk to the market.
The big winner on the day, of course, is Goldman Sachs who made a last minute downgrade of the data to -250K (from -200K). This should help their conspiracy followers feel better about their close ties to the government. You’ve gotta start wondering if Goldman hasn’t turned more neutral (or short) on the market after ramping right up to their price target of 1060.
Stocks shouldn’t respond too negatively to the data, however, as this was largely priced in when Goldman Sachs issued their downgrade yesterday.
Factory orders also fell…the markets aren’t reacting too much to the news. It seems there are dip buyers and short covering. I heard from TA people that there has to be a gap filled to 1015 and then we go back up a few %’s.
TPC, what do you think of the analysts estimate for 3rd quarter? any chance for better than estimate earning still? It seems the expectation is gradually moving up.
Henry,
I’ll have a formal earnings report analysis out next week. I haven’t finished crunching the numbers yet….
Nice catch over at ZH:
Submitted by Nic Lenoir of ICAP
The usual suspects [ZH: emphasis ours] did a great job at managing the market expectation yesterday, which is why we dipped ahead of the number, and shorts took profit following the release. Congress’s Finance Committee get the numbers at 2PM the day prior, why shouldn’t the right institutional traders get them too? Obviously this softened the blow delivered by the news.
Yesterday was a brutal day no matter how you dice it. What’s still up for debate is why we were up 2% on Monday….I’d love an answer to that one….
My guess is there will be another 2% up day soon.
GS may be short knowing that there could be a lot of selling pressure due to all the prop trading wanting to lock-in their bonus’s for the year after such big gains. That’s why they so urgently paid back their TARP. They’ll probably engineer a nice 15% correction to the end of November, and get a nice little bonus on THEIR bonus.
I am guessing if we closed under 1020, then it will be more pressure on the down turn.
I am really curious on how GS get the number pretty close. One reason I ask about the expectation for next quarter is because they failed miserably on this NFP numbers.
From the other post.
“That’s because at -263,000 on nonfarm payrolls, instead of the -175,000 print that was widely expected, we actually saw sequential deterioration for the first time since May as the August decline was -201,000 (though revised from -216,000; July was revised lower to -304,000 from -276,000)”