Perhaps just as interesting as where the jobs were last month, is where the jobs apparently weren’t.
A sizable beat on October payrolls generally reinforced aggressive Fed terminal rate expectations, which ratcheted higher this week around the November FOMC meeting. But there were “cracks” in the jobs report.
A negative reading on the household survey (figure below) will invariably raise questions about possible revisions.
Do note: This isn’t the first time the household survey has printed in negative territory this year. It’s actually the third. April and June likewise saw negative readings.
As a reminder, there’s scant evidence for the narrative that says negative household readings are generally associated with an eventual “reckoning” (so to speak).
The figure (below) shows the recent history of robust (here defined as 200,000+) pre-revision NFP prints contemporaneous with negative readings on the household survey.
When you compare the pre-revision NFP prints to the twice-revised, final figures, there’s no obvious trend. If anything, revisions tend to be positive.
Maybe “canard” is too strong a word for the chart header, but I’m not inclined to scour the thesaurus for something better on Friday. Maybe a big downward revision is coming, maybe it isn’t. Recent history is agnostic in that regard.
More notable was the rather large decline in real estate. The sector dropped almost 9,000 jobs in October, which doesn’t sound a lot, but it was (figure below).
The 8,700 decline was among the largest in recent memory outside of the pandemic and the subprime crisis.
Reports of job losses in the industry are piling up. Zillow is laying off 5% of its workforce, Redfin 6% and Opendoor 18%. “The reality is, we’re navigating one of the most challenging real estate markets in 40 years and need to adjust our business,” Eric Wu, Opendoor CEO and Co-Founder, told “teammates” this week. “While we may be navigating a once-in-forty year market transition, it doesn’t take away the difficulty, frustration and sadness downsizing brings.” (No, it doesn’t.)
Also missing jobs: Department stores, which shed more than 5,000 workers in October. It was the third straight monthly decline, and the sixth in eight. To be fair, though, department store employment has been falling steadily for years. The series is just one long, painful decline, starting in ~2001, with intermittent bouts of hiring. That conjures a bit of sad nostalgia. As odd as this might seem to younger readers, there was a time when America’s department stores were a kind of wonderland at Christmas for anyone under, say, 12. Malls, like dodo birds, used to be a thing.
Ultimately, October payrolls was a mixed picture. For markets, though, mixed isn’t “good” enough if you’re looking for a light at the end of the Fed tunnel. It’s going to take a lot more than a handful of job losses in housing, an unreliable decline on the household survey and a few thousand less people selling perfume, belts and second-tier handbags, to dissuade a panel of much maligned technocrats concerned about how they’ll be remembered by economic historians.
