Posted by David Rosenberg - Gluskin Sheff

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There’s no other way to describe the U.S. employment report that was just
released for September.  And guess what?

There’s no other way to describe the U.S. employment report that was just released for September. And guess what? The rose-colored glass donning set of economists who have been talking about sequential improvement in the data and how “less negative” the employment numbers have become can’t say that after today (thank the good lord). That’s because at -263,000 on nonfarm payrolls, instead of the -175,000 print that was widely expected, we actually saw sequential deterioration for the first time since May as the August decline was -201,000 (though revised from -216,000; July was revised lower to -304,000 from -276,000). If you think that is bad, consider that the Household Survey showed a massive 785,000 plunge in September which again was sequential deterioration because the decline the month before was 392,000. We’ll see if the legions of bulls will add this in their post-payroll write-ups today, but the Household survey actually leads the labour market at true turning points in the business cycle – and employment on this score has now slid by 1.2 million in the past two months.

These numbers far from validate the overwhelming consensus view that the recession has come to an end just because of one positive stimulus-crazed GDP print (didn’t we have that in 2008 too?); not to mention the fact that the last time we came off such a two-month falloff in Household employment was back in March when the stock market was testing fresh 12-year highs. Sustainability is the key and there can be no durable recovery without net job creation and organic wage growth. Both were lacking in today’s report – in fact, the combination of the workweek edging back down to retest the all-time low of 33.0 hours and the near-stagnation in hourly wages dragged the proxy for personal income down 0.2% (reads: in nominal terms) and the year-over-year trend is getting perilously close to deflation terrain at +0.7% from +0.8% in August and +1.2% in July.

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