Pause

Today’s key Nov Payroll release seemed to fly in the face of our long-held view that employment and spending activity would exceed expectations. For example, there was no change in the workweek, manuf employment dropped by 13M, private sector jobs increased only 50M vs 160M for Oct; finally, unemployment jumped to 9.8%.

Nothing moves in a straight line in this economy but in ratchet fashion. We have experienced nearly two months of results which have flattened estimates. It may be that forecasters, weary of being severely beaten about the head and body, figured it was time to reverse course, crowd fashion. Hiring instead took a time out and flattened these guys once more.

Our recommendation to corporate planners or investors would be to remain anchored; that is, the central flaw to street estimates over the intermediate term will be the under-estimation of vigor in payrolls and spending.

Robert Craven