Some Bright Spots in a Gloomy Jobs Report

Jason Stipp: I'm Jason Stipp with Morningstar. The government released employment data this morning, and it was disappointing for most market watchers. The unemployment rate crept up to 10.2 percen; that's higher than a lot of people expected, and the market shed 190,000 jobs in October.

Here with me to dig in the numbers a little bit is Morningstar's Bob Johnson. He's Associate Director of Economic Analysis. Thanks for joining me, Bob.

Bob Johnson: Good to be here.

Stipp: A lot of attention paid to that 10.2 percent and the 190,000 jobs lost, but you dug into it a little bit, and there's a little bit more to the story here, so tell me a little bit about what you found there.

Johnson: Absolutely. The bad news is, is that we had been looking for 160,000-170,000 job losses, and we got the 190,000 number. It looks disappointing on the surface, but what happened is they went back to the prior months and said that we had more jobs than we thought, about 50,000 in each of the last two months.

If you net the three months together, we are far better off than people thought we were yesterday.

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Stipp: So revisions, obviously a lot of people aren't paying attention to those, they're looking at the newest headline numbers.

Johnson: Exactly.

Stipp: When you look back, and you're measuring it, it's almost like the goal posts were moved a little bit, and we should take that into consideration when we're looking at that 190,000 loss.

Johnson: Absolutely. They were big adjustments and across many different categories.

Stipp: This data that came out today, also likely to be adjusted in the future as well.

Johnson: Absolutely. And some of the data that I have seen from the ISM, the purchasing managers survey, would have said manufacturing numbers would've looked a little better than they did. So, I'm wondering if those might get revised the next time around a little bit.

Stipp: So, digging into the numbers and looking sector by sector, was anything looking particularly bad? Anything looking a little bit better? Any bright spots? Any surprises?

Johnson: Sure. Construction, as usual, is weak. Manufacturing was weak. And continuing a trend, retail was weak. Each one of those was fairly similar in terms of job losses, and most of the other categories were relatively flat.

Probably the biggest surprise, was temporary help was up over 40,000 jobs. The reason that's so important, is temporary help--[companies] hire people on a temp service before they hire full-time people of their own.

That number's been trending in a positive way, but to actually see it up, and up 44,000 in one month, is a great sign.

Stipp: So, it could be a leading indicator of better things to come?

Johnson: Absolutely. Finance, even, a sector that was pretty hard hit--we didn't lose any more jobs in finance this month. So, there are some positive signs underneath the covers here.

Stipp: So, the last question, you had mentioned yesterday when I had talked to you about keeping an eye on wages and some of that data. What did you see there? Any bright spots? Anything interesting?

Johnson: Yes. The real hourly wage was actually up just a little bit, and it was actually up 3/10 of one percent; so if you annualized it, it was 3.6 percent. Some of that's because there were higher-paying jobs and there were retail jobs, which are lower-paying, which I mentioned have lost a fair number. So, that's part of the reason, the mix.

As an economist, I don't care. To have the raw number go up is a very positive thing.

Stipp: Well, great. Thanks for your insights. Thanks for joining me today, Bob.

Johnson: Good to be here.

Stipp: For Morningstar, I'm Jason Stipp, thanks for watching.