Unemployment Report 3-6-09
Posted by Larry Doyle on March 6, 2009 9:21 AM |
The highly anticipated monthly unemployment report was just released. On the surface, the numbers may appear to be in line with expectations, but looking deeper into the numbers the report is actually worse than expected. Let’s dive into the numbers and comment on what they mean for our economy and markets.
The Unemployment Rate jumped from 7.6% to 8.1%. The rate was expected to move to 7.9%. The 8.1% rate is a 25 year high.
Non-farm Payrolls lost 651k jobs against an expectation of a loss of 650k jobs. In line with expectations, right? Well, one needs to look at the revisions to the prior two months to get the full picture. Non-farm payroll revisions from the prior two months show a further loss of 161k jobs over and above initial reports. That’s ugly!! Total jobs lost since December 2007, when the recession officially began, are 4.4 million!! More than half of those jobs have been lost in the last 4 months.
Average hourly earnings only rose .2. This number is not exactly robust and will further pressure consumers who are already cash constrained.
Average workweek remained steady at 33.3 hours. With fewer workers, but no increase in the workweek, this indicates that expected GDP will remain sluggish.
Jobs were lost across virtually every sector of the economy with the exception of healthcare. Manufacturing and construction were particularly decimated with losses of over 100k.
While the actual unemployment rate is 8.1%, that figure does not fully represent the actual health of employment in our country. Why? Very simply there are thousands of workers who have given up looking for work. They do not figure into the rate. Additionally, there are thousands who are underemployed, meaning they are working part time but would like to work fulltime.
Analysts do not see any news in this report indicating an improving economy.
Market reactions are generally muted. Stocks are effectively unchanged, and bonds are down a touch. Remember, next week the U.S. government is auctioning another $67 billion in a variety of notes to finance our growing deficit. Look for rates to rise in front of that supply.
I have done some market analysis over the last few days and see no reasons to get constructive on buying the market at this juncture. The forces at work in the economy continue to indicate challenging times on the horizon. The programs from Washington are receiving mixed reactions and muted benefits at best.
We may still get days like this past Wednesday which are nothing more than bear market rallies. The bearish trend remains in place and the path of least resistance remains LOWER.