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HomeUnemployment Report: November 6, 2009
Posted by Larry Doyle on November 6th, 2009 8:55 AM |
The widely anticipated November Unemployment Report covering the month of October was just released. Let’s dive right in and take a look at the numbers . . .
I. UNEMPLOYMENT RATE
July: 9.5%
August: 9.4%
September: 9.7%
October: 9.8%
– November Consensus Expectation: 9.9%
– November Actual:10.2% !!!!
>> LD’s comments: this is the shocker and will get all the play. This rate is especially damaging because the participation rate declined. That drop would help the unemployment rate, all other things being equal. The fact that the rate jumped to 10.2% is an indication that job losses jumped much more than otherwise expected with a loss 558k jobs. The underemployment rate (U-6 rate) is 17.5%!!
II. NON-FARM PAYROLL (click here for definition of this term)
July: initial loss of 467k initially revised to a loss of 443k and now revised to a loss of 463k
August: initial loss of 247k revised to a loss of 276k, further revised to -304k
September: initial loss of 216k, revised to a loss of 201k, revised to a loss of 154k
October: a loss of 263k, revised to a loss of 219k
– November Consensus Expectation: loss of 175k
– November Actual: a loss of 190k with revisions of +91k to prior months
>> LD’s comments: this month’s print is slightly worse than expected, but given the revisions the overall non-farm payroll could be spun in a somewhat positive fashion. In my opinion, there has been massaging of these numbers for many months and dare I say market participants are questioning the integrity of the reports. Recall that the birth-death model has likely overestimated job creation by upwards of 800k jobs. More of the same here? Perhaps, if not likely. Temporary workers did increase by 36k jobs.
III. AVERAGE HOURLY EARNINGS
July: 0.0%
August: +.2% revised to +.3
September: came in at .3 but then revised to .4%
October: .1%
– November Consensus Expectation: +.1%
– November Actual:+.3%
>>LD’s comment: a positive for those working, but in conjunction with no movement in the hourly workweek this is muted.
IV. AVERAGE HOURLY WORKWEEK
July: 33.0 hours
August: 33.1 hours
September: 33.1 hours
October: 33.0 hours
– November Consensus Expectation: 33.0 hours
– November Actual:33.0 hours
>> LD’s comments: no indication here of any strength. This number rests at a low going back to 1964.
V. FURTHER COLOR
It’s all about the headline print of 10.2%. That number will spook consumers and keep Consumer Confidence under pressure. The Fed will clearly remain on hold for as extended as extended can be. I expect this report will cause Washington to talk about the need for another stimulus package.
VI. MARKET REACTION
At 8:10am:
2yr Tsy: .89%
10yr Tsy: 3.52%
S&P 500 Futures: +2
DJIA Futures: +14
U. S. Dollar Index: 75.78
At 8:50am, Post-Report:
2yr Tsy: .85%
10yr Tsy: 3.47%
S&P 500 Futures: -8
DJIA Futures: -68
U.S. Dollar Index: 75.86
Questions, comments, constructive criticisms always encouraged and appreciated.
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Thanks.
LD
Jobs + Housing = Consumer Confidence
Posted by Larry Doyle on October 27th, 2009 3:05 PM |
Market analysts and government officials would attempt to define overall confidence in the economy utilizing a variety of data. In my opinion, consumer confidence is ultimately a function of two factors: employment and housing.
While Uncle Sam has spent trillions of dollars backstopping various sectors of the financial markets and billions in economic stimulus, the size and scope of our employment and housing markets vastly overwhelm Uncle Sam’s ability to ‘prop them up.’ As a result, I am not surprised to see the monthly data on consumer confidence reflecting real weakness.
Bloomberg provides further insight on this topic in writing, U.S. Economy: Consumer Confidence Drops On Unemployment Concern:
Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.
The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low. (LD’s highlight) (more…)
Unemployment Report: September 4, 2009
Posted by Larry Doyle on September 4th, 2009 9:14 AM |
The widely anticipated September Unemployment Report covering the month of August was just released. Let’s dive right in and take a look at the numbers . . .
Unemployment Rate
June: 9.4%
July: 9.5%
August: 9.4%
September: 9.7%!!
>>LD’s comments: higher than the expectation of 9.5%. Recall that the rate moved down last month from 9.5% to 9.4% as the labor pool shrunk. This move higher puts the rate back on the track it previously held and would project to a likely double digit unemployment rate in the 4th quarter.
Where’s the stimulus? Where are the jobs? Bulls would say the employment situation is stabilizing. Pragmatists look at the numbers and see an economy settling in to a likely low growth path at best. The unemployment rate of 9.7% is the highest since 1983. The underemployment rate of 16.8% is very sobering!!
Non-Farm Payroll (click here for definition of this term)
June: loss of 322k
July: loss of 467k initially revised to a loss of 443k and now revised to a loss of 463k
August: loss of 247k revised to a loss of 276k
September: loss of 216k
>>LD’s comments: Close to consensus, but the prior two months had revisions showing further declines of 49k. (The prior month was revised from a loss of 247k jobs to 276k. July was revised from a loss of 443k jobs to 463k jobs). Manufacturing lost 63k jobs, government showed a loss of 18k jobs with more of these at the state level.I repeat my comments from above. We are not witnessing any inclination by private companies to start the rehiring process. As such, the likelihood of long term structural unemployment is growing. This fact will serve as a real drag on consumers in general and the economy as a whole.
Average Hourly Earnings
June: +.1%
July: 0.0%
August: +.2% revised to +.3
September: came in at .3 with the prior month revised to .3 as well.
>>LD’s comments: Largely due to the increase in the minimum wage. Do not look at this increase as an indication of potential growth in retail sales.
Average Hourly Workweek
June: 33.1 hours
July: 33.0 hours
August: 33.1 hours
September: 33.1 hours
>>LD’s comments: as expected the average hourly workweek remained unchanged. This number, which remains mired at a level last seen in 1964, is an indication that an expected rebuild in inventories is not on the near term horizon.
Further Color: the economy remains significantly challenged. Despite all of the government stimulus and government programs, in my opinion the economy is very vulnerable. Behind these numbers, the consumer is seeing few signs of improvement in the jobs space. That reality is impacting the sluggish retail sales along with the continued increase in delinquencies and defaults on the credit front.
Market Reaction: futures have been bouncing up and down post-report. Prior to the report, equity futures indicated a slightly positive opening to the equity market. Now the futures are closer to unchanged.
Interest rates have also bounced around, but the front end of the yield curve seems better bid as the unsettledness behind these numbers makes investors nervous.
The dollar index is somewhat improved but not in a meaningful fashion.
Add it all up and I see the following:
>> the cheerleaders can put away the pom-poms
>> the pure doom and gloom guys who have been short forever remain frustrated
>> the economy remains challenged and will bump along the bottom. No “V” recovery, but more like the “caterpillar” designation assigned by our Sense on Cents Economic All-Star Bob Rodriguez.
Get used to it because it is not going to change appreciably anytime soon.
I repeat my market call from the other day in which I believe equities will retreat from current levels.
Please track our work here at Sense on Cents via Twitter, Facebook, RSS feeds, or e-mail subscription. Visit and comment often!!
LD
Unemployment Report July 2, 2009
Posted by Larry Doyle on July 2nd, 2009 9:02 AM |
The widely anticipated July Unemployment Report covering the month of June was just released. Let’s dive right in and take a look at the numbers . . .
Unemployment Rate
April 8.5%
May 8.9%
June: 9.4%
July: 9.5%
> LD’s comment: consensus forecast was for the rate to move to 9.6%. However, it is now widely regarded that this rate will not only go into double digits soon, but then stay there. Why? The workforce is going to grow as individuals who would have retired stay employed or look to reenter the workforce.
Non-Farm Payroll (click here for definition of this term)
April: loss of 663k (revised from -663k to -616k and back to -652)
May: loss of 539k (revised from -539k to -519k…thanks AK!!)
June: loss of 345k (revised to -322k…thanks AK!!)
July: loss of 467k
> LD’s comment: this number is decidedly worse than the forecast of a loss of 365k jobs. Revisions to prior months were mildly positive adding 8k jobs. Overall assessment of this number is ‘no green shoots’ here.
Average Hourly Earnings
April: +.2
May : +.1
June: +.1%
July: — (i.e unchanged)
> LD’s comment: no surprise that there is little wage pressure …the annual increase in wages of 2.7% is the lowest in 4 years.
Average Hourly Workweek
April : 33.2 hours
May: 33.2 hours
June: 33.1 hours
July: 33.0 hours
> LD’s comment: this number is a big deal!! The 33.0 hour workweek is the shortest workweek since 1964!!! What does this mean? An indication of no pickup in orders or inventory pickup. This number combined with the hourly earnings is an indication that retail sales will remain weak as consumers continue to be constrained and insecure about their future.
Further Color: The auto industry lost 27k jobs last month. The industry has lost 335k jobs in total, a full third of the total employment in the industry. Manufacturing lost 136k jobs, professional and business lost 118k jobs, construction lost 79k jobs.
Long term unemployed, that is individuals out of work more than 27 weeks, now represents 30% of overall unemployed. This is very troubling. Bloomberg reports,
Unemployment will “remain painfully high for several more years,” Federal Reserve Bank of San Francisco President Janet Yellen said this week.
Market Reaction: equity futures have sold off sharply on this weak report. The futures were down approximately .2 right before the report’s release and are now down more than 1.5%. Interest rates have moved lower by 3 -4 basis points led by the front end of the curve. The dollar got hit marginally after the report as well.
I view this report as a “reality check.” What do I mean? The economy is in the process of adjusting to the lack of credit provided by the shadow banking system and that credit is not returning anytime soon.
In this economic environment, I believe unemployment is a leading indicator and thus I view this report as a sign that delinquencies, defaults, and foreclosures will continue to increase across all classes of debt.
Please track our work here at Sense on Cents via Twitter, Facebook, RSS feeds, or e-mail subscription. Visit and comment often!!
LD
Unemployment Report June 5, 2009 >> UPDATE
Posted by Larry Doyle on June 5th, 2009 5:45 AM |
UPDATED AS OF 9:15AM
The report was surprisingly strong on one front but with reason for caution as well!! Let’s dive right in.
Before this morning’s numbers were released:
The widely anticipated June Unemployment Report covering the month of May is due out this morning at 8:30 am (EST). Will this report show signs of improving trends in the pace of layoffs? I remain quite skeptical about the data connoting ongoing improvements while simultaneous negative revisions receive limited focus. We have experienced ongoing layoffs within the private sector with some pickup in government hiring. I believe we will likely see a pickup in layoffs at the state and local levels as tax receipts continue to disappoint.
In regard to revisions versus the actual report, let’s revisit what I wrote a month ago in my commentary for the May Unemployment Report:
On the face, the report appears better than expected but given the additional job losses in the revised numbers for February (an additional 18k jobs) and March (an additional 48k jobs) we are still in the 600k average job loss for the month. Private sector lost 611k jobs while government added 72k jobs with a lot of those people being temporary workers employed by the Census Bureau. The fact that temporary government workers are factored into overall employment, in my opinion, is stretching the integrity of the report. Health care added 17k jobs, manufacturing lost 149k jobs, construction lost 110k jobs, financial services lost 40k jobs.
Expectations for this morning’s report, as well as previous months’ data, are as follows:
(Note: please check back shortly after 8:30am when I will post the actual for June unemployment statistics, along with my post-report commentary.)
Unemployment Rate
April 8.5%
May 8.9%
Expectation for June: 9.2% (recall how the base case for the Bank Stress Tests was 8.9%. Here we are in June and have exceeded 9%. I think it is a lock that we hit 10% and not inconceivable that we push 11% by year end.)
Actual for June: 9.4%
Post report comment: this rate is substantially higher than the expectation of 9.2% and implies that we will almost certainly get to 10% sooner than expected.
Non-Farm Payroll (click here for definition of this term)
April: loss of 663k
May: loss of 539k
Expectation for June: loss of 520k
Actual June report: loss of 345k
Revisions: April and May combined gained 82k jobs
Post report comment: a much better than expected number with positive revisions to prior months. May was revised from -539k to -504k.
Average Hourly Earnings
April: +.2
May : +.1
Expectation for June: +.1%
Actual June report: +.1%
Post report comment: as expected. No surprise that wages are under control with slack employment. This number does not support any expectation of a pickup in consumer demand and retail sales.
Average Hourly Workweek
April : 33.2 hours
May: 33.2 hours
Expectation for June:33.2 hours
Actual June report: 33.1 hours
Post report comment: this number is weaker than expected. It does not support any expectation of a pickup in new orders driving a rebuilding of inventories.
7am: equity index futures are higher by.4%. The 10yr Treasury is trading at 3.74%. The 2yr Treasury is trading at .97%.
Post report market reaction: equity index futures jumped from .4 to 1.4% while bonds have sold off. The 10yr initially moved higher to 3.87% but is now at 3.82%. The biggest move in the bond market, though, is on the front end of the curve. The 2yr has increased by 25 basis points to 1.22%!!! Of all the numbers and moves, this should attract the most attention. Why?
The market is telling the Fed the following: if in fact the economy has bottomed in terms of a slowing in job losses, then a degree of economic traction will lead to inflation (even without a pickup in wages). The Fed may need to revisit the idea of leaving the Fed Funds rate at 0-.25% for the foreseeable future.
The “patient” is stabilizing, but still faces numerous side effects from all the procedures!!
If you like what you read and see here, please put Sense on Cents (www.senseoncents.com) in your favorites, and visit and comment often. Thanks!
LD
April Unemployment Report: UPDATE!!
Posted by Larry Doyle on April 3rd, 2009 7:26 AM |
Before this morning’s numbers were released, I published:
The widely anticipated April Unemployment Report will be released at 8:30 am EST. Concerns over this report have increased over the last two days given a report from ADP on Wednesday which forecast an increasing rate of decline in employment. Additionally, Weekly Jobless Claims increased yesterday.
Over and above the actual report, the Bureau of Labor has consistently revised prior months’ numbers worse than initially reported. Aside from the headline print, a thorough analysis needs to focus on these revisions. I will report back shortly after 8:30pm with the actual numbers!!
Last month’s numbers and expectations for this report are as follows:
**note: I have now included the actual numbers which were reported at 8:30 a.m.:
Unemployment Rate
March 8.1%
expected 8.5%
April Report 8.5%
The UnderEmployment Rate is 15.6% as reported by Bloomberg! This rate incorporates unemployed (not working, but looking for work), underemployed (working part-time, but would prefer full-time), and unemployed, having given up looking for work. These last two groups are not included in the reported 8.5% unemployment rate.
Non-farm Payroll
March Report 651k
April expected 658k
April Report 663K
January Revision from 655k to 741k
Avg Hourly Earnings
March Report +.2%
April expected +.2%
April Report +.2
Avg Hourly Workweek
March Report 33.3 hours
April expected 33.3 hours
April Report 33.2 hours
Analysts hit the numbers, as they came in as expected. Wow! Are the analysts that good or are these numbers being “managed” or “massaged” so as not to overly upset the markets? Well, we did have a significant revision to January’s report. Let’s dig deeper!!
Call me paranoid, but when a January Non-Farm Payroll number is revised from a loss of 655k jobs to 741k and no revision is provided for February, I immediately ask why.
The fact that the average hourly workweek actually declined by .1 from 33.3 hours to 33.2 hours is very meaningful. With job losses increasing, and the remaining workers actually working fewer hours, this is an indication of declining flow of orders.
No improvement in average hourly earnings, so no expectation of improvement in consumer spending.
Market reaction: bonds slightly lower. Stocks initially popped higher but are now selling off slightly.
The WSJ reports: Recession Job Losses Top 5 Million
Aside from these numbers, in regard to the G-20, the big winner seems to be the International Monetary Fund. It is reported that the IMF will receive $1 trillion to allocate to emerging economies and developing countries. It was not widely reported that some of those funds had already been committed to the IMF, so it is not “new” money. The old double counting trick!!
LD
March 2009 Market Review
Posted by Larry Doyle on March 31st, 2009 7:47 PM |
The markets, overall, experienced a very solid rebound this month. Technically, the market got oversold bottoming out on March 6th when the S&P 500 hit the devilish level of 666!! Perhaps some divine intervention prevailed and shed a wee bit of grace on the market in the spirit of Saint Patrick. Perhaps not, as well. In any event, we rebounded close to 20% over the last three weeks. The bounce has allowed us to catch our breath but I caution everybody to remain on guard.
The rebound gained support from the following factors as well:
1. stabilization in the weekly unemployment claims at the 650k; level
2. improved figures in housing starts and new home sales;
3. speculation that the FASB will relax the mark-to-market; (more…)
