Gluskin Sheff’s Rosenberg: Jobs Report Has ‘Deflationary Feel’

Friday, 02 Nov 2012 03:50 PM

By Dan Weil

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The October jobs report “was more treat than trick,” but it had some disturbing elements, says David Rosenberg, chief economist of Gluskin Sheff.

While payrolls grew by 171,000, workers’ average weekly hours gained only 0.1 percent in the private sector, and average weekly earnings dipped 0.3 percent.

"That has a certain deflationary feel to it,” Rosenberg writes in a report obtained by Business Insider. “The price of labor should hardly be contracting if the jobs market is in fact returning to normal in any meaningful way."

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

Thus Rosenberg isn’t expecting anything great from the economy, which grew 2 percent in the third quarter.

"Headline employment aside, barring an upturn in productivity, the economy likely remained just as sluggish in Q4 – even adjusting for the Sandy Storm – as it was in Q3, where the true underlying momentum was south of a 1 percent annual rate,” he writes.

U.S. productivity rose 1.9 percent in the third quarter. But Rosenberg worries that growth rate is decelerating, contributing to the recent spate of weak earnings reports.

Others were more enthusiastic about Friday’s jobs report than Rosenberg.

"This report is consistent with the emerging picture of an economic recovery that is continuing to regain traction after grinding to a halt earlier this year," Millan Mulraine, an economist at TD Securities, tells Reuters.

Maury Harris, chief economist at UBS, tells Bloomberg, “Jobs are expanding despite all this expression of business caution.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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