New jobless claims drop last week

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jobless claimsWe got a bit of surprising news today, hearing that new jobless claims fell to 530,000 last week.

Going into today's announcement from the Department of Labor, analysts had been expecting to see an increase of 5,000 new jobless claims last week. This marks the third week in a row that we have seen new jobless claims fall.

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New jobless claims drop last week originally appeared on BloggingStocks on Thu, 24 Sep 2009 17:00:00 EST. Please see our terms for use of feeds.

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Unemployment continued to rise in August

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unemploymentRecently we have been hearing more and more reports that the recession is nearing its end, but these news stories are going to do little to ease the minds of large numbers of people that have have lost, or are in fear of losing their jobs.

August was yet another tough month for jobs, as 42 states in the nation reported job losses during the month. That number is up from 29 states in July.

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Unemployment continued to rise in August originally appeared on BloggingStocks on Fri, 18 Sep 2009 15:20:00 EST. Please see our terms for use of feeds.

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House may extend unemployment benefits

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It appears that the House may be ready to extend unemployment benefits for another 13 weeks.

On Wednesday, September 23, Congress will consider legislation to add 13 weeks to unemployment benefits in what are termed "high-unemployment states." In order to be considered a high-unemployment state, the unemployment rate must be greater than 8.5%. With unemployment at record highs nationwide, this status includes 26 states and the District of Columbia. What about the other 24 states? The unemployed workers there could qualify if their state is expected to hit 8.5% unemployed or it meets other criteria.

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House may extend unemployment benefits originally appeared on BloggingStocks on Fri, 18 Sep 2009 11:00:00 EST. Please see our terms for use of feeds.

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Temp Hiring: No Imminent Jobs Recovery

temp hiring shows no rebound

As we have long noted, the coincidental and leading aspects of the employment data remained mired in negative territory. They are not forecasting a jobs recovery anytime soon.


U.S. companies are still reducing the ranks of temporary workers, showing that any rebound in overall employment won’t happen soon, according to William Hester, an analyst at Hussman Econometrics.

The CHART OF THE DAY compares the number of temporary employees with nonfarm payrolls since 1990, according to data compiled by the Labor Department. Increases in the number of temporary jobs in 1991 and 2003 preceded similar recoveries in payrolls, as the chart illustrates.

“Temporary hiring is a reliable leading indicator,” Hester wrote yesterday in a report that featured a similar chart. Last month’s decline in these jobs was “one of the most discouraging data points” in the latest employment report, he added.

The number of temporary workers dropped by 6,500 in August to 1.74 million. The total has fallen each month since January 2008, a month after the current U.S. recession officially started. During the 20-month streak, temporary jobs have declined by 33 percent.

Note also that Manpower said its index of U.S. companies’ hiring plans set a record low for the third straight quarter, dating back to 1962.

Not exactly a green shoot, here . . .


Temporary Hiring Is Bad Sign for Jobs: Chart of Day
David Wilson
Bloomberg, Sept. 8 2009

Labor-less Day

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Last Friday the market reacted favorably (or less negatively) to the latest report from the Labor Department's unemployment figures of 9.7 percent in August, as employers cut 216,000 jobs last month. The percentage is up but the raw numbers are trending down allowing for a sigh of relief on Wall Street with the major indices all up over 1%.

Many would argue that when it comes to the truth, the government is prone to favor aesthetic figures instead of the straight data. I tend to agree with this view as the numbers appear sculpted to be the least offensive.

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Labor-less Day originally appeared on BloggingStocks on Tue, 08 Sep 2009 14:30:00 EST. Please see our terms for use of feeds.

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Total 10 Year Job Gains: Negative 203k

Speaking with Marketwatch’s Rex Nutting, I learned yet another incredible datapoint: Over the past decade, the U.S. private-sector has lost 203,000 jobs.

That’s right: Zero job growth for 10 years.

In the 1940s, we created 10 million jobs. In the 1990s, we added 19 million new jobs. Even during the much-maligned 1970s, we added almost 16 million jobs.

The 2000s might be zero. Some economy, huh?

The government has created 2.1 million jobs over that period — primarily teachers. And, that’s the weakest government job growth in nearly two decades.

Happy Labor Day!

all employess private industry

Comfort Zone Investing: Road signs, good and bad, to navigate the market

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Unlike Commissioner Gordon who can send out the Bat signal to call his helpmate against crime, there is nothing investors can do to summon aid in times of stress. They have to go it alone. But they can be armed with intelligence that helps. Here are few of the most prominent data points that will make a difference for all stocks, a macro perspective that should make navigating the stock market highway a little easier.

However, taken on a one-time basis, these aren't going to solve the mystery that is the market. Rather, data has to show a trend before it can be used. Even then, a trend stops and another begins. So even though the trend can be your friend, it can just as easily turn and become your enemy. As they used to say on Hill Street Blues: Be careful out there.

Continue reading Comfort Zone Investing: Road signs, good and bad, to navigate the market

Comfort Zone Investing: Road signs, good and bad, to navigate the market originally appeared on BloggingStocks on Sat, 05 Sep 2009 10:30:00 EST. Please see our terms for use of feeds.

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Canada posts first job gain in four months

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Employment in Canada rose by 27,000 in August, however, the unemployment rate also rose to 8.7% from 8.6%.

Here's why we shouldn't get excited over this report. The employment gain was mainly in part time jobs which rose by 30,600.

By sectors the numbers break down this way:

  • Manufacturing lost another 17,300 jobs, with 12 months losses at 231,000 or 12%.
  • Government jobs fell by 11,500.
  • Self-employed fell by 10,600

Continue reading Canada posts first job gain in four months

Canada posts first job gain in four months originally appeared on BloggingStocks on Fri, 04 Sep 2009 11:10:00 EST. Please see our terms for use of feeds.

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NFP = -216k; Unemployment = 9.7%

The monthly NFP improved slightly, with total NFP job losses at 216k. The U3 Unemployment rate spiked to 9.7% — levels not seen since 1983. Can 10% be very far behind?


“Nonfarm payroll employment continued to decline in August (-216,000), and the unemployment rate rose to 9.7 percent, the U.S. Bureau of Labor Statistics reported today. Although job losses continued in many of the major industry sectors in August, the declines have moderated in recent months.

In August, the number of unemployed persons increased by 466,000 to 14.9 million, and the unemployment rate rose by 0.3 percentage point to 9.7 percent. The rate had been little changed in June and July, after increasing 0.4 or 0.5 percentage point in each month from December 2008 through May. Since the recession began in December 2007, the number of unemployed persons has risen by 7.4 million, and the unemployment rate has grown by 4.8 percentage points.”

Big spike up in unemployment likely has to do with some of the oddities surrounding the labor pool and recent large bankruptcies i.e., GM/Chrysler).


Employment Situation News Release
BLS, September 4, 2009

Non Farm Payrolls

G’morning. We awake this morning awaiting BLS’ NFP report. The consensus estimates of US job cuts is for 230,000, and a tick up in the Unemployment rate to 9.5%.

Unless there is a wild surprise, the good news is the 500, 600 even 700+k losses per month during the worst of it is now well over. Where I differ from most of the Wall Street establishment is their belief that the moves away from the horrific data series — 2 million job losses over 6 months — means that we are now on the mend.

Consider a different possibility: That we have settled into a longer stretch of moderate (by comparison) job losses. The way I interpret the most recent data is that the massive government activity is obscuring the ongoing economic weakness. While we are no longer in full blown panic mode, we are still showing serious job losses. My concern is that we are not likely to put up a string of positive numbers anytime soon.

Hence, one scenario the mainstream seems to be ignoring is a potential ongoing weak labor situation for quarters, if not years, to come. Job losses of 100-300k for several more months, and then moderating further, to 50-100k. By the time we reach breakeven — about 150k per month to keep up with population growth — could be late 2010 or even 2011. And significant job creation of 300k per month or greater could be a long time from now.

Recall that heading into the recession, the public, mired in their “Mental recession” got it right, while the so-called experts, economists and pundits were dead wrong. Here we are again, at another possible fork — and we see (as Mike Panzner pointed out yesterday) that once again, the cabal of perennial perma-optimists are bullish, while John Q. Public is decidedly more cautious. (My money is with John Q.).

If the public is right and the pros wrong, what might the labor market and jobless rate mean for foreclosures and consumer spending?


Employment Situation is released at 8:30am EST

For those of you who delve beneath the headlines, watch the revisions, hours worked, temp help, and Birth Death model for some deeper insight.

BLS Birth Death Conundrum ?

July Non Farm Payrolls is out tomorrow, making today a good day to review one of our favorite whipping boys: BLS Birth Death model.

We’ve discussed this ad nauseum, but a brief explanation for the new BP readers: The idea behind the B/D model is to make up for the lag between new firms forming and when they eventually get counted into the Labor statistics. B/D has two major impacts over the course of an economic cycle: It makes the reporting of job creation more accurate in the early recovery phases, but at the expense of overstating employment at the end of the cycle.

I’ve noticed that quite a few defenders of the Birth/Death Model have become emboldened by the market rally. I don’t want to name names, but as a group, the B/D defenders were horrifically wrong across the board about nearly everything — about the housing crisis, the credit collapse, the recession, the market crash, and of course, the massive loss of jobs since hiring peaked late 2007-08.

Their track record precludes taking their rhetoric about B/D very seriously.

For those of you who relish an intellectual challenge, consider the following: Since reaching peak employment in January 2008, small-size businesses have shed nearly 2.5 million jobs. Construction employment dropped for the thirty-first consecutive month in August. The total decline in construction jobs since the peak in January 2007 to 1,562,000. ADP counts 2.5 million small biz job losses since January 2008.

Over the same period, the BLS’s Net Birth/Death Model, which is supposed to account for small biz job losses and gains, shows 1.507 million job gains. The difference is over 4 million jobs — about 3% of the total employed.

A quick look at the historical data tracks the changes to the B/D model, proposed in 2001 ans implemented a few years later (try to guess where):

Historical Net Birth/Death Adjustments *
1999:  30k
2000: 193k
2001: 91k
2002: 470k
2003: 695k
2004: 827k
2005: 817k
2006: 1002k
2007: 1130k
2008: 904k
2009: 555k  (January – July)


* 1999 to 2002 are April thought March measures; 2004 forward is calendar year; 2003 data is for April-December. Data for 2007-09 is preliminary, subject to future benchmarking


Is there a legitimate way to defend this? Or, is the B/D model so wildly wrong as to be indefensible?


Current Employment Statistics – CES (National)
Historical Net Birth/Death Adjustments

CES Net Birth/Death Model
Current Employment Statistics – CES (National)

Data Points to Ongoing Economic Woes

Despite the cheerleaders best efforts, the latest set of data to come out is filled with signs that the recovery — when it finally arrives — will be unimpressive. The best word for it is probably “sluggish.”

My belief has been the government stimulus, cash for clunkers, and first time buyers tax credit has partly obscured the ongoing weakness, making it appear better than it really is. As these programs sunset, what is left behind is a wounded economy, healing very slowly.

Employment: I am not a huge fan of the ADP Report — its useful for trend only, but its precision and accuracy is somewhat wanting. However, the downside surprise this morning lends evidence that we will not see a notable improvement in NFP on Friday.

adp august 09Bloomberg:

“Companies eliminated more jobs than forecast in August, a private survey indicated today, signaling that employers have yet to gain confidence about a recovery from the deepest recession since the 1930s.

The 298,000 drop followed a revised 360,000 decline the prior month that was smaller than previously estimated, according to figures from ADP Employer Services.”

Retail Sales: No money, no sales. With hiring soft, wage gains flat, and various costs of living like health care and education seemingly immune to deflation, the consumer is pinched. (Don’t blame me, I am doing my part).



ISM was more positive, but it is essentially a survey (diffusion index) and not an actual measure of production, sales or hiring.

Weak Consumers, Creditless Firms Impacts Recovery

Two interesting front page articles this morning expand on several of our favorite themes.

The first, the NYT’s A Reluctance to Spend May Be a Legacy of the Recession, treads over some well worn ground with anecdotes and data.  The anecdotal stuff is the usual mix of sad tales, and psychology, some signs of improvement and recovery.

Two data points worth noting are:

“Between 2003 and 2007 — prime years of the housing boom — the net worth of an American household expanded to about $540,000, from about $400,000, according to an analysis of federal data by Moody’s

Now, the wealth effect is working in reverse: by the first three months of this year, household net worth had dropped to $421,000 . . .

As recently as the middle of 2007, Americans saved less than 2 percent of their income, according to the Bureau of Economic Analysis. In recent months, the rate has exceeded 4 percent.”

What is omitted from the article is the why:  3 asset class collapses (Stocks, Housing, then Stocks again) will wreak havoc with yor psychology. Add to it shrinking Real Income, and voila! Consumers find frugality to be their new mantra.

The WSJ takes a different tack, looking at the advantages of larger versus smaller firms — but using the same anecdotal hooks to tell the story (I omit anecdotes for the obvious reasons):

The U.S. recovery is a tale of two economies. At one extreme of Corporate America is a cadre of companies and banks, mostly big, united by an enviable access to credit. At the other end are firms, chiefly small, with slumping sales that can’t borrow or are facing stiff terms to do so.

On Main Street, there are consumers with rock-solid jobs — but also legions of debt-strapped individuals struggling to keep their noses above water.

This split helps explain the patchiness of the recovery that appears to be taking hold after the worst recession in a half-century . . .”

Both of these are well worth your Saturday morning reading time . . .



A Reluctance to Spend May Be a Legacy of the Recession
NYT, August 28, 2009

Halting Recovery Divides America in Two
WSJ, August 29, 2009

Green jobs coming, thanks to investors

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If you want to feel like what you do for a living makes a difference, you'll soon face an embarrassment of riches.

The alternative energy industry -- the green business -- is about to ramp up its hiring, with the next year likely to show an increase in demand, according to U.S. Labor Secretary Hilda Solis.

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Green jobs coming, thanks to investors originally appeared on BloggingStocks on Tue, 11 Aug 2009 12:50:00 EST. Please see our terms for use of feeds.

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Temporary Help Is Less Bad

Students of economic and employment data know that many of the components of the Employment situation are leading economic indicators.

I like to look specifically at Temp Help for some insight as to the demand for lLabor and Employer confidence.

My go to guy for all things Temp Help is Bruce Steinberg. His monthly analysis on  Temp Hiring makes for a sober and clear eyed assessment follwoing the NFP release.

You can see both year-over-year and monthly data charted below. As you might imagine, Y-Y is down substantially — about 26%. The monthly data, while volatile, seems to be moderating, falling about half a percent (0.56%).


click for larger chart

chart courtesy of Bruce Steinberg

Taking a Closer Look at NFP

I did not have time to take Friday’s BLS release apart until now — between the fishing and the drinking I am slacking off during my Maine trip — but it only took a cursory glance to see July NFP was not all it was cracked up to be.

This was the best employment number in 12 months — yet it was still a loss of 247,000 jobs. Under normal circumstances, this would an awful number. To put that into context, it would have been the worst month in mots of the recessions over the past 30 years.  But after recent monthly NFP job losses of 650k and 700k, somehow 247k seems like good news. Its a classic case of been down so long it feels like up to me.

Let’s take a quick look beneath the headline job number and see what was really going on.

1) Unemployment: The fall from  drop in the Unemployment Rate was hailed as a huge improvement by few pundits commenting on — before they had a moment to even read the release. Had they bothered to look at the releaser (crazy idea, I know) they might have learned how this data point is constructed.

The participation rate fell by 0.2 point, and the employment/population ratio fell by 0.1 point — this is now at levels not seen since April 1984 (see chart below). NILFs — “not in the labor force” increased by a huge 637,000. Bruce Steinberg notes that those not in the labor force topped 81 million for the first time ever. That gain in NiLF accounted for the entire decrease in unemployment rate.

Here is how this works: There are two numbers that make up Unemployment — people who have jobs, and the Labor Pool. This month, the Unemployment rate went down because the Labor Pool contracted — not because more people found work.

A decreasing Labor Pool is often a negative, not a positive, economic signal. (Jake at Econompic does a nice job explaining how the math works).

As the chart below shows, the Labor Pool has been falling for quite some time:



Chart via Jake at Econompic


2) Mostly Government Sponsored Hiring: A large chunk of the moderation in job losses was directly due to government activity. The spurt in auto production (helped by GM and Chrysler calling back workers after emerging from bankruptcy) was a result of the a Billion already spent in Cahs for clunkers, and the prospect of another $2 billion yet to come. Add in federal government hires for census and others, and you effectively add 100,000 to the jobs count.

3) Wage Gains: David Rosenberg notes that the increase in average hourly earnings owed in part to the boost in the minimum wage, in other words a nonrecurring item that “does not at all reflect an improvement in underlying income fundamentals in the personal sector.”

Add in recalled workers in Autos and this element is nearly all Uncle Sam.

4) Seasonal Adjustments: John Williams of Shadow Stats observes that the improvement in second derivatives (the rate of change)  is due to the way the decline’s severity perverts seasonal adjustments.

In particular, (1) Year-to-year comparisons will begin to see a flattening in annual declines, as year-ago numbers used in comparisons were in severe contraction. (2) Extreme economic disruptions have distorted patterns of regular activity and related seasonal-adjustment processes.

Williams notes that this upward seasonal adjusting bias has created unwarranted job gains in 10 of the previous 12 months that total over 1.1 million jobs.


One final observation on sentiment:  Rosenberg was quoted in Barron’s this weekend, discussing how the market prices in bad news and occasionally manages to overshoot in each direction.  He points to the unusual fact that since March, “for the first time ever, it has rallied nearly 50% amidst a two-million-job slide.

That is a disturbing factoid, one that suggests a disconnect is taking place between equities and the real world. That wouldn’t be the first time this occurred. And when that disconnect gets too wide, as we have seen in the past, the market corrects, often violently.

September and October are but a few weeks away . . .


Hair of the Dog
Alan Abelson
Barron’s AUGUST 10, 2009