Slow,
Steady, Weak, Uncooked Growth in Jobs Report
by
Sinclair Noe
DOW
+ 34 = 13,610
SPX -0.47 = 1460
NAS – 13 = 3136
SPX -0.47 = 1460
NAS – 13 = 3136
10
YR YLD +.07 = 1.73%
OIL – 1.79 = 89.92
GOLD – 9.00 = 1782.30
SILV - .46 = 34.61
PLAT – 13.00 = 1710.00
OIL – 1.79 = 89.92
GOLD – 9.00 = 1782.30
SILV - .46 = 34.61
PLAT – 13.00 = 1710.00
The
first Friday of each month brings the jobs report and it is always
important economic data. This is the first Friday in October, in an
election year; so, it is really big news. We've discussed at great
length that the jobs report is imperfect; even after revisions, the
report is imperfect. Still, the report provides a manner of
comparison, and it is the best we have. It provides an apples to
apples comparison.
The
economy added 114,000 jobs in September. The unemployment rate fell
to 7.8% from 8.1% The unemployment rate is the lowest since 2009, and
the first time the rate has dropped under 8% during the Obama
administration. The private sector has now added jobs for 31
consecutive months. Still, 114,000 new jobs would have to be
considered weak growth. The
best guesses are that the economy would have to generate at least
250,000 jobs each month for several years to reduce unemployment to
around 6%. So, the first question is why did the
unemployment rate drop when the number of new jobs was only showing
weak growth?
The
Labor Department revised employment figures for August and July to
show somewhat faster job growth in late summer, mostly because of
government hiring. State
and local governments accounted for virtually all of the added job
gains, mainly through the hiring of more teachers. The number of new
jobs created in August was revised up to 142,000 from an original
estimate of 96,000. July’s figure was revised up to 181,000 from
141,000. Monthly
job growth averaged 146,000 in the third quarter, down from 226,000
in the first three months of 2012.
In
September, the biggest increase in hiring took place in health care,
finance, and transportation and warehousing. The health-care sector
added 44,000 jobs, banks and other financial institutions hired
13,000 workers (a trend that might turn negative with the already
announced layoffs at some of the big banks) and 17,000 jobs were
added in transport. The construction trade added 5,000 workers in
September and just 1,000 jobs gained in August. The government added
10,000 jobs last month and a combined 73,000 jobs in the third
quarter. That’s the biggest increase in full-time jobs since
mid-2008
Manufacturers
reduced employment for the second straight month, cutting 16,000 jobs
in September following a 22,000 drop in August. This is important
because manufacturing jobs are generally considered good paying
positions. So, the gains were concentrated in health care,
transportation and warehousing, and finance. Manufacturing employment
dropped, which corroborates weakness in factory activity that may
reflect the slowing global economy and worries about possible
problems from the fiscal side of the equation; in other words, what
might happen if the politicians continue to act like blithering blobs
and nattering nabobs of negativity.
Average
hourly wages rose 0.4% in September to $23.58, they’ve only climbed
1.8% over the past year. The average hourly workweek, meanwhile,
edged up 0.1 hour to 34.5 last month. The workweek usually rises when
the economy gets stronger. Hours have been essentially flat for the
past year.
According
to the Bureau of Labor Statistics, the number of people with
full-time jobs increased by 838,000 in September to 115.2 million,
while the number of people with part-time jobs declined by 26,000 to
27.7 million. In other words: once you net it out, all of the gains
in employment were due to full-time jobs.
There
was also a large increase in the number of people who want a
full-time job but who are forced to settle for less than 35 hours of
work because of the tepid economy or weak demand at their workplace.
The
rise in involuntary part-time work certainly seems to indicate the
economy remains weak, but there are signs of improvement. By the
middle of 2009, the number of part-timers had increased by 2.8
million at the same time that full-time positions fell by 8.9
million. In the past year, 2.7 million more Americans are working
full time, while the ranks of the part-timers has increased by
91,000.
Now,
let's go back to the first question: how did the unemployment rate
drop 0.3% while only adding 114,000 jobs? Well, there are two jobs
reports, not one; there is the establishment survey; there is also
the household survey. Let's break it down.
For
the establishment survey, each month the Labor Department asks
141,000 business and government agencies representing almost a half
million work-sites, how many people they hired. The establishment
survey is used to calculate the number of new jobs created or lost
each month. In September, the economy added a net 114,000 new jobs.
The
household survey involves sending out questionnaires to 60,000
households and asking if these people found work. This is the figure
used to calculate the unemployment rate. In September, the household
survey showed an 873,000 increase in the number of people who said
they found work. So, you are probably thinking that number is a
mistake. Nope. The household survey is based on a smaller sample than
the establishment survey, therefore the household survey is more
erratic, less precise, and more volatile. Still, there is a certain
predictability to the volatility.
In
August and July, the household survey revealed a combined 314,000
decline in the number of people with jobs. Then September shows a
873,000 spike. The same thing happened earlier in the year. The
household survey jumped 847,000 in January and 428,000 in February.
It then fell by a combined 200,000 in the next two months. Also,
September tends to be a volatile month for the household survey,
probably because of the jobs associated with the school year and the
upcoming holiday season. And then the number are revised as
information is updated. It is possible that next month we could see
gains in the establishment survey, and the household survey could see
the unemployment rate move higher.
So,
you can try to smooth out the numbers. The three-month average of job
gains for the third-quarter is 146,000 per month, down from earlier
in the year. The
U6 rate, which includes those who can only find part-time jobs or
have given up looking for work. The U6 jobless rate was unchanged at
14.7% last month.
Even
though payroll growth was sluggish, this employment report was an
improvement over recent reports, especially with the upward
revisions, the increase in hourly earnings, and the increase in the
25 to 54 employment-population ratio. This is sometimes referred to
as the participation rate and it shows the 25 to 54 age range finding
jobs. We also have a demographic shift taking place. You've probably
heard that 10,000 boomers hit retirement age every day. We are seeing
a major demographic shift in the labor market, and there probably are
a whole bunch of people who are not counted as unemployed but rather
not counted because they are considered retired. There are a lot of
people with a lot of experience and expertise that need to be better
utilized.
Again,
you have to compare apples to apples, and if you do that you will see
that we have a pretty solid trend of job growth; it's a solid trend
of weak job growth but it is job growth. Since February 2010, the
economy has added 5.2 million private payroll jobs. Even as
private-sector jobs have grown, the economy has lost public-sector
jobs since April 2009. Since President Obama took office in 2009,
private non-farm payrolls have risen by 514,000 and government
payrolls have dropped by 575,000. Now, if you add in the Bureau of
Labor Statistics’ benchmark preliminary revisions (which offer an
even more accurate look at jobs figures), then the private sector has
created 967,000 jobs since Obama took office, while governments at
all levels have shed 642,000 jobs.
It
took a long time, but the Obama administration can now report
positive job growth on their watch and an unemployment rate under
8%. Still, there is nothing great in these numbers; there are still
23 million un-or-under employed. The jobs picture is still bad but it
is showing slow consistent improvement.
And
it is 5 weeks before the election. And some people are now claiming
that it is a grand conspiracy. The books are cooked. Jack Welch, the
former CEO of GE tweeted: “Unbelievable jobs numbers.. these
Chicago guys will do anything.. can’t debate so change numbers.”
And while this may seem to be a wild accusation of extreme
corruption, you have to consider the source. If anybody knows about
cooking the books, it would be the former head of GE Capital who
managed to beat quarterly earnings estimates by exactly one penny.
Bloomberg
reports on Conn Carroll of the Washington Examiner who thinks it's a
bottom up conspiracy, with some 60,000 household survey respondents
lying and saying they got jobs just to make the president look good.
That's
the best one I heard today, and I think that if those 60,000
households are not fully employed, then really, there is something
terribly wrong. Think of all these people who were able to network
and communicate and pull off this massive conspiracy. My God, these
people must be diabolical geniuses. If they're not employed they
should be, because these are really clever people.
I turn your attention to a couple of good articles on the presidential debates.
The US presidential debates' illusion of political choice by Glenn Greenwald
And
also,
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.