Payrolls: Unhelpful, As Usual

With the Independence Day holiday behind us and a sunny weekend in front of us, this is going to be a quiet day even by summer-Friday standards. As a result, the jobs report which came out this morning is bound to get a large chunk of what little attention the market is paying to what's going on. And that's a pity, since, like most jobs reports of late, it has increasingly little credibility.

Barry Ritholtz today does a good job of taking the jobs report apart, saying that a lot of it just doesn't pass the smell test, including the 4.5% unemployment rate, the rise in construction employment, and the boost of 156,000 jobs due to the birth/death adjustment. Calculated Risk, too, is puzzled. And, as is increasingly normal on the first Friday of the month, past jobs reports got revised massively, which should be enough to make traders wonder why they should take this month's numbers seriously.

My take on the jobs report is that once upon a time it was useful, but that nowadays, with a large increase in self-employment and with the margins of error dwarfing the actual numbers reported, it's becoming largely irrelevant. The only useful thing you can do with it is look at it through squinted eyes and try to discern vague trends: in that respect, one might be able to say that weakeness in the housing market has not visibly fed through to weakness in the broader economy, at least as far as employment is concerned. But this report is far from dispositive: if you think that, contra the report, there actually is weakness in the US jobs market, you might well be right. With the quality of statistics we have to work with, there's simply no way of telling for sure.