Friday, October 3, 2014

The Bureau of Labor Statistics just released the September jobs report and it pleasantly surprised to the upside.  The consensus was for an increase of 210,000 but it came in at 248,000.  The past two months were revised to the upside by  about 70,000 so the net is a monthly increase of 318,000.  This is a good report, not a great report because hours worked and hourly earnings are still stagnant and the labor force participation rate is still the lowest since 1978.   
Let's take a look at the internals because that is what drives our analysis, hourly earnings were flat as mentioned but weekly hours worked was 34.6 vs last month's 34.4. Employers are still not paying their employees more but did give them slightly more hours.  We need both to happen, hours worked and wages to increase, employers don't want to hire more people because they have learned to do more with fewer people but also they fear Federal regulations if they do. The labor force participation rate is at almost 40 year lows, part of that is because of a population growing older but part is because so many long term unemployed people are dropping out of the labor force because they are so discouraged with the job market.  If the participation rate was the same as last month, the unemployment rate would have stayed at 6.1% rather than the 5.9% that was reported this morning.  In September, 97,000 people dropped out of the job market, so of these people may never make it back to full employment like they used to have.
The confusing part of the story is that this a good report but not as good as we would like, 400,000 a month for a string of months with wages and hours worked increasing is what we need. The President said on "60 Minutes" last week that the country is better off than when he took office but also acknowledged that most the majority of Americans don't believe it.  This is my belief as well, studies show that more seniors are working longer than they have in past years in order to make ends meet. It begs the question of how really strong this economy is and how it translates into the fall election.  Will Americans believe the 5.9% unemployment rate and believe things are good or look at their pocketbook and job prospects and hit the re-set button.    

Saturday, December 3, 2011

Santa comes early?

The labor department just released its November jobs number and the rate fell to 8.6% while 120,000 total jobs were created and 140,000 private sector jobs were added as well.  Expectations have been moving higher as the ADP private employer number released on Wednesday showed a 206,000 increase in November.  The futures were strong before the news on constructive debt talks in Europe over night and then stalled as the internals show the work week stayed the same at 34.3 hours worked but hourly earnings dropped 0.1% vs. an expectation of 0.2% gain.  The participation rate on the survey dropped which probably explains the unemployment rate drop down to 8.6% so don’t be surprised if the rate is revised back up next month to close to 9%.  The job revisions added some positive data points as October was revised to 100k from 80k and September went to 210k from 158k so a net gain from revisions of 72k.  You add 72k to the headline number of 120k and you end with 192k,000 jobs created which is good for those people who got jobs and comes close to the 200k needed monthly to keep up with population growth.  I have been saying for months that the US was not headed for a double dip recession and today’s number adds to that thesis,  however I also don’t extrapolate one month’s number into a trend so while today’s number is welcome it doesn’t mean we have a blockbuster economy because we don’t.  Job creation has been lagging while the recent economic data is good as indicated by data below.  The argument put forth by most CEO’s who do speak on record is that they are afraid to hire because of all the added regulation and the specter of higher taxes rates down the road so it seems as if we may move back and forth while not going anywhere over the next year until the next election decides who is going to be in charge of the US economy.  The Dems want to tax the rich and anything that moves in order to pay down the debt and the GOP wants to lower corporate tax rates and make permanent the Bush tax cuts while raising revenue from closing loop hole deductions and subsidies.  Each side in intractable and not likely to give any room in concessions therefore it is up to the President to decide if he is willing to let the country and economy stall for the next 11 months hoping to get 4 more years for state controlled redistributionist schemes. 

Friday, November 4, 2011

Warm Glass of Coke

The Labor department just released the October nonfarm jobs report and it was okay, kind of like a glass of warm coke which is now lost its zest.  Total payrolls added 80,000 and September was revised from 103k to 158k and August went from 57k to 104k so when taken in unison it was 187,000 higher which lowered the unemployment rate to 9.0% from 9.1%.  We need to be adding over 200k a month just to keep up with employment trends and closer to 400k a month to dig us out the hole we are in.  The average workweek was flat at 34.3 hours and earnings were also flat at 0.2% so employers were neither working their employees longer nor paying them more and both need to happen in consecutive months to create a trend you can believe in.  Private payrolls added another 104k but 117k was expected so put this in a bowl and stir it all up what you get is a rather thin cake batter or weak uninspiring job market.  I have been saying for months that the data doesn’t indicate we are headed for a double dip recession but rather a long protracted slog until the tone and rhetoric from Washington DC changes to a more business friendly song.  One confusing area in the report was the drop in unemployment from 9.1% to 9.0% when only 80k jobs were created, this could be explained by the very high birth/death rate of about 500k. The labor department uses this rate to estimate the opening and closing of new businesses, this is a controversial number as it is completely unpredictable and varies widely.  The trend is the most important thing and therefore looking at the weekly jobless number that has been dropping below 400k for the last month is indicative of an economy that is trying to gain traction.  Despite what Washington may spin on this, it is a warm coke report that has lost its zest.