Yesterday’s 271K Oct. jobs report came as a big jolt to the markets. Bonds sold off hard as stocks struggled all day to find a direction on dollar strength.
Until I read the Bureau of Labor Statistics report, I was shocked as well.
But there it was buried in the report, 165K phantom jobs was assumed to be created during the month. The BLS says it can’t know all of the jobs that are created in any one month so the monthly number of job created includes guesses based on historical data and the economic situation.
So when I assumed the number would be 120K for the month, I was not to far off if you started at zero.
Just do the math, 271K-165K=106K is closer to where the job number should be for Oct. Now let’s assume the did miss some job creation in Oct. add back 30K and you have a very disappointing jobs number that would mean the Fed would be stuck at zero through 2015.
This is why jobs data is revised in prior months for every report.
Now the bias for the Nov. jobs report is not as large generally if you go back to previous reports, so the Nov. will probably not be as strong and will come out a little over a week before the Fed meets in the middle of Dec.
So what does the Fed do with this data? I believe it should stand pat, but it could use it as a ramp to lift depending on its own bias.
But we’ll leave that for another day.