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Hold On: Jobs Report Wasn't So Great After All

You can call it the "You want fries with that?" jobs report.
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Consider it a brutal lesson in government math.

Friday's turbocharged jobs headline came thanks to seasonal adjustments and other wizardry at the Bureau of Labor Statistics, which reported that U.S. job growth hit 321,000 even as the unemployment rate held steady at 5.8 percent.

Those numbers, courtesy of establishment survey estimates, sound nice on the surface, and they certainly present reasons if not for unbridled optimism then at least confidence that the job market continues to mend and is on a pretty steady trajectory higher.

However, the household survey, which is an actual head count, presents details that show there's still plenty of work to do.

A few figures to consider: That big headline number translated into just 4,000 more working Americans. There were, at the same time, another 115,000 on the unemployment line. That disparity can be explained through an expanding labor force, which grew 119,000, though the participation rate among that group remained at 62.8 percent, which is just off the year's worst level and around a 36-year low.

But wait, there's more: The jobs that were created skewed heavily toward lower quality. Full-time jobs declined by 150,000, while part-time positions increased by 77,000.

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Analysts, though, mostly gushed over the report.

Fixed income strategist David Harris at Schroders said it was "unquestionably strong and significantly exceeded expectations." Economist Lindsey Piegza at Sterne Agee called it "impressive," while Paul Ashworth at Capital Economics termed the headline gain "massive" with "labor market conditions improving at breakneck speed."

As for the unseemly nature of the internals, Michelle Meyer of Bank of America Merrill Lynch said the "gift" of a report should override those concerns.

Points not to like

"Household jobs were only up 4,000, which on the surface is a disappointment. However, this follows an outsized gain of 683,000 in October and 232,000 in September, leaving the three-month moving average still up a healthy 306,000," Meyer said in a report for clients. "The monthly survey of household jobs tends to be quite noisy, suggesting caution when reacting to a given month of data."

But there were several other points not to like in the report.

Families, for instance, also were under pressure: There were 110,000 fewer married men at work, while married women saw their ranks shrink by 59,000.

And there was an exceedingly huge disparity between expectations and results: ADP's report Wednesday showed just 208,000 new private sector positions, compared with the 314,000 in the BLS report. That's a miss of 51 percent, the worst showing for ADP's count since April 2011 even though the firm has touted its partnership since then with Moody's Analytics as a way to make its count more accurate.

Some Wall Street analysts had been scaling back their calls, and Goldman Sachs, which has had a good history of picking the number, was expecting gains of 220,000. Even the most buoyant economist on the street, Joe LaVorgna at Deutsche Bank, was looking for 250,000.

Finally, there was a rather startling numerical coincidence: That same 321,000 figure was repeated later in the report—as the total number of bar and restaurant jobs created over the past 12 months.

Taken in total, a peek beneath the hood of these numbers suggests a job market that still has a ways to go.