Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

MARKET MENTALITY- the Jobs Report is 'Real'-NOT!
http://www.dailyreckoning.com/Issues/2005/WEDR110505.html

Once a month, the Bureau of Labor Statistics release reports to show how many jobs have been added in the past month, what the unemployment rate is, and other fun facts.

Yesterday, they released October's jobs data, and we found out that while wages did rise at their fastest pace in over two years, job growth is at a stall. After seasonally-adjusting the numbers (October is the month that holiday help is hired), only 56,000 jobs were added to the U.S. economy - about half the number economists were hoping for.

"Job growth...appeared below trend in October," said Kathleen Utgoff, commissioner of the BLS, in a statement. "It is possible, of course, that employment growth for the nation could have been held down by indirect effects of hurricanes Katrina and Rita, for example, because of their impact on gas prices."

However, Bloomberg.com points out that hiring was lagging throughout the country, even in regions not directly affected by the hurricanes. In a recent poll by the University of Michigan, 60 percent of people questioned said that they expected the next five years to bring periods of widespread unemployment.

The doesn't say much for consumer confidence - and many of the sectors that would usually be beefing up their staff this time of year is proving that point.

"In October, car dealers, hotels, restaurants and movie and music studios all cut jobs. Department stores added fewer jobs than they typically do during October; that shows up as a loss in the Labor Department report, because the government adjusts its numbers to account for normal seasonal variations," says an article in the NY Times.

So, while retailers did report surprisingly good sales for October, these sectors are still wary that high energy prices will eventually take their toll on consumers.

While this data for the jobs reports is fairly straightforward, what about all the other numbers and statistics found in there? What should we be looking at? For the answer, we turn to EverBank's Chuck Butler, who covers the data (which he calls the "Jobs Jamboree") in his daily e-letter, The Daily Pfennig.

"These labor reports are a pile of junk," he says. "They don't tell us anything but the total number of jobs."

"They don't say what kind of jobs were created. They don't say if the jobs have benefits. They don't say if they will earn more than the minimum wage."

According to Chuck, even with the high margin for error in these reports, the markets love them.

"I remember when trading desks stopped to see what the weekly money supply numbers were. Now that was worth putting emphasis on - but some trumped up, no-information jobs report? Come on."

The point Chuck wants to make is that, as we all know, the market's mentality is out of whack. He advises that the average weekly hours worked and earnings are more important when looking at the reports.

Just another reason why you shouldn't be swayed by the mentality of the markets.

Kate Incontrera
The Daily Reckoning

P.S. In addition to writing The Daily Pfennig, which you can find posted every morning on the DR home page, Chuck Butler is Senior Vice President of EverBank World Markets.