Payrolls surprise economists with a drop

It seems lately that many economists are constantly surprised by statistics released from various sources, and the latest payroll numbers are no exception. While expecting an increase of 75,000 jobs nationally for the month of December, they actually fell by 17,000, leading many analysts to insist we're at the 'tipping point' for a recession but not willing to suggest that we're actually in one yet. While most of the job losses in housing and construction weren't a surprise, the loss in government jobs was. From a Wall Street Journal article:

Nonfarm payrolls fell 17,000 in January, the Labor Department said Friday, the first drop since August 2003, when payrolls slid 42,000. Gains in services like health care, retail trade and leisure offset declines in other sectors including manufacturing, construction, financial services and government...

Wall Street economists had expected a much sturdier 75,000 rise in payrolls last month. Jobless claims, after all, hovered near 300,000 for much of January, well below December levels. And a report released Wednesday from ADP and Macroeconomic Advisers that attempts to mirror the jobs report signaled 130,000 private-sector jobs were created last month.

Following is an interview with the Chief Economist for Nomura Securities regarding this latest jobs report.