Why the November Jobs Report Could be an Anomaly

At first blush Friday’s Employment Report stood out given the strong job creation beat relative to expectations, but as the trading day wore on gravity set in on the stock market, which closed the day off its morning highs. The Bureau of Labor Statistics reported 321,000 jobs were created in November vs. the 230,000-consensus expectation and 271,000 jobs created in September.

Normally one would have expected better than expected job growth to fuel a move higher in the market, but the November figure was met both with skepticism because the BLS supplied figure flied in the face of ADP’s private sector focused jobs report for November that saw a month over month drop in the number of jobs created.

Moreover, the employment data released by the Institute for Supply Management (ISM) showed slower job growth in November than October in both the manufacturing and non-manufacturing categories. Even Gallup’s payroll to population figure for November fell to 44.2% from October’s 44.4%.

With so many pieces of data not supporting the BLS report, the growing thought is it was more of an anomaly than a true indicator of the job market. We’ve seen this recently with the Thanksgiving weekend holiday shopping tallies. Per the National Retail Federation (NRF) data, sales during the four-day Thanksgiving holiday period fell 11% to $50.9 billion from $57.4 billion, with shoppers spending an average of only $380.95, down 6.4% from $407.02. Tying the two figures together, you may be wondering how the NRF reconciles down 6.4% with down 11%, and the answer is this: a 5.2% year-over-year drop in the number of people who shopped over the four-day weekend to 134 million.

Online shopping accounted for 42% of spending over the four-day period, down from 44% last year, with the average number of consumers spent online declining 10% from a year ago to $159.55. This is where I start to pick apart the NRF's findings, because several other reports contradict the trade group's findings.

First, over the weekend IBM, said online sales for Black Friday climbed 9.5% over the same day last year. Digital measurement company ComScore also shared its Thanksgiving and Black Friday findings, which more than confirmed IBM's take. Per ComScore, online shopping on Thanksgiving Day saw a 32% gain to $1.01 billion. This marked the first time in its history that online shopping on that day surpassed the billion-dollar threshold.

Moreover, it was the first day of the 2014 season to break through that level. Turning to Black Friday, Comscore saw the online spending surge continue with $1.51 billion in desktop online sales, up 26% from Black Friday 2013.

Simply put, this casts some doubt on the NRF's online data just as employment data from ISM, Gallup and ADP raise flags on the BLS’s November Employment Report.

Another issue is the implied drop in weekend shopping, when we match the NRF's findings with that of research firm ShopperTrak. ShopperTrak estimated sales at brick-and-mortar retail stores came to about $12.29 billion on Thursday and Friday, compared with $12.35 billion spent during the same two days last year. That is a drop of roughly 0.5%, which means holiday shopping over the weekend had to fall off a cliff, or else.

The bottom line is there always tend to be a number of forecasts, but what separates the forecasts you pay attention to vs. the ones you don't are the track record and corroborating factors. In this case, at least to me, it looks increasingly like the NRF needs to overhaul its forecasting methodologies to better capture data and reflect shopper preferences. The same can be said for the BLS as well as the methodology behind the Unemployment Rate calculation to better reflect the low labor force participation and shrinking labor force.