Category Archives: Employment

employment situation

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First the release and mainstream commentary:

Employment Situation
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Highlights
The November employment situation was significantly stronger than expected. Payroll jobs jumped 321,000 after gaining 243,000 in October. Analysts expected a 230,000 rise and the November boost topped the high forecast for 275,000. September and October gains were revised up notably by a net 44,000. The unemployment rate held steady at 5.8 percent. Expectations were for 5.8 percent. Wages rose sharply in the latest month.

Going back to the payroll report, private payrolls advanced 314,000 after increasing 236,000 in October. Analysts projected 225,000.

Goods-producing jobs gained 48,000 in November after a 28,000 advance the month before. Manufacturing employment increased 28,000 in November, following a boost of 20,000 in October. Motor vehicles and parts rose 11,000, after increasing 5,000 the month before. Construction jumped 20,000 after a gain of 7,000 in October. Mining slipped 1,000 in November, following no change the prior month.

Private service-providing jobs jumped 266,000 after a 208,000 increase in October. Strength again was in professional & business services and retail trade.

Average hourly earnings jumped 0.4 percent in November after edging up 0.1 percent the month before. Expectations were for a 0.2 percent rise. Average weekly hours edged up to 34.6 hours from 34.5 hours in October. Analysts expected 34.6 hours.

The November employment report clearly shows an improving economy. This suggests improving profits but also likely will raise chatter of the Fed moving forward the first increase in policy rates.
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Here’s a longer term view:
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And here’s the Nonfarm Payroll numbers not seasonally adjusted they convert to monthly numbers with their adjustments, which they’ve recently redone:

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And here are the household survey releases that showed 0 jobs after a near 700,000 gain the month before and 0 the month before that. Over time the household survey and Nonfarm Payroll report tend to converge:

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And they are spinning this as a dangerous uptick in compensation:
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This is more straight forward and indicative of ‘improvement’:
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ADP, mtg purch apps, Productivity, ISM, oil and gas well permits

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Remember, this is their forecast for Friday, not hard data from their subscribers:

ADP Employment Report
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Highlights
ADP’s estimate for private payroll growth for November is 208,000 vs the Econoday consensus for 225,000 and against a revised 233,000 for October. The corresponding Econoday consensus for Friday’s jobs report from the government is 225,000 vs October’s 209,000.

Both ADP and the BLS data have shown new jobs working their way lower after peaking earlier in the year after dipping for the cold winter and at the same time absorbing some of the 1.2 million who lost benefits at year end and subsequently took menial jobs:
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Mtg purchase apps still down year over year and moving sideways at best:

MBA Purchase Applications
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Highlights
The purchase index snapped back in the holiday shortened November 28 week, rising 3.0 percent after falling 10.0 percent in the prior week. The gain helped the year-on-year reading which improved to minus 4.0 percent from minus 10.0 percent. The refinance index, however, continues its long run in negative trend, down a steep 13.0 percent for a sixth straight decline. Rates were mostly lower in the week with the average 30-year mortgage for conforming loans ($417,000 or less) down 7 basis points in the week to 4.08 percent.
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The decline in unit labor costs might be of interest to the Fed:

Productivity and Costs
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Highlights
Nonfarm productivity growth for the third quarter was revised up to an annualized 2.3 percent from the first estimate of 2.0 percent and following a 2.9 percent boost in the second quarter. Unit labor costs were revised down notably to minus 1.0 percent from a first estimate of up 0.3 percent after falling an annualized 3.7 percent in the second quarter.

Output growth slowed to 4.9 percent in the third quarter, following a 5.5 percent jump the prior quarter. Compensation growth in the third quarter was up 1.3 percent annualized after a dip of 0.9 percent the previous period.

Year-on-year, productivity was up 1.0 percent in the third quarter, down from 1.3 percent in the second quarter. Year-ago unit labor costs were up 1.2 percent, compared to up 0.7 percent in the second quarter.

The latest productivity report points to positive company profits and mild gains in consumer income.
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Good news on the ISM survey, though the employment index fell:

ISM Non-Mfg Index
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Highlights
ISM’s non-manufacturing sample reports very solid conditions, at a composite 59.3 in November vs 57.1 in October. Aside from August’s 59.6, November is a recovery high going back more than 9 years. New orders are very strong, up 2.3 points in the month to 61.4 with backlog orders up 4.0 points to 55.5 in a reading last matched in April 2011. Strength in orders is keeping up business activity which rose 4.4 points to a very strong 64.4. Employment remains solid but did slow 2.9 points from October’s near record of 59.6. Deliveries slowed noticeably, which is another sign of strength, while inventories rose. Pressures on input prices rose a bit to 54.4 which, however, is still benign for this reading. A look at industries shows the retail sector at top, which of course is very good news going into the holidays, and construction right behind which is also very good news. This report points to solid year-end acceleration for the economy.

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Meanwhile, the oil drilling slowdown might be on the high side of expectations:

Exclusive: New U.S. oil and gas well November permits tumble nearly 40 percent

By Kristin Hays

Dec 2 (Reuters) — Plunging oil prices sparked a drop of almost 40 percent in new well permits issued across the United States in November, in a sudden pause in the growth of the U.S. shale oil and gas boom that started around 2007.

Data provided exclusively to Reuters on Tuesday by industry data firm Drilling Info Inc showed 4,520 new well permits were approved last month, down from 7,227 in October.

The pullback was a “very quick response” to U.S. crude prices, which settled on Tuesday at $66.88 CLc1, said Allen Gilmer, chief executive officer of Drilling Info.

New permits, which indicate what drilling rigs will be doing 60-90 days in the future, showed steep declines for the first time this year across the top three U.S. onshore fields: the Permian Basin and Eagle Ford in Texas and North Dakota’s Bakken shale.

The Permian Basin in West Texas and New Mexico showed a 38 percent decline in new oil and gas well permits last month, while the Eagle Ford and Bakken permit counts fell 28 percent and 29 percent, respectively, the data showed.

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more seriously worrisome releases today

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Chicago PMI
11-26-1
New Home Sales

11-26-2
Pending Home Sales Index

11-26-3
Personal Income and Outlays
11-26-4
11-26-5

Jobless Claims

11-26-11


Durable Goods Orders

11-26-6
Highlights
The headline number for durables looked good for October but the core number notably disappointed.

Durables orders rebounded 0.4 percent in October after September’s decline of 0.9 percent. Market expectations were for a 0.5 percent decline.

The core fell 0.9 percent in October after a rise 0.2 percent the month before. Analysts projected a 0.5 percent gain for October. Transportation increased a monthly 3.4 percent after falling a monthly 3.3 percent in September.

MBA Purchase Applications
11-26-9
Highlights
Data that are weekly are often subject to volatility, wild volatility in the case of the purchase index over the last two weeks which fell 10.0 percent in the November 21 week after surging 12.0 percent in the prior week. The trend, based on the 4-week average, is again clearly negative, at minus 10.0 percent year-on-year.

Consumer Sentiment
11-26-10

 

 

 

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Employment and related commentary

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Seems universally agreed the labor market is ‘improving’ even as the jobs chart has been downward sloping since the peak in April, wage growth has softened from relatively low levels, and the work week fell back some.

It’s all screaming ‘lack of aggregate demand’ in no uncertain terms. That is, the deficit is too small. And the new Congress is heck bent on deficit reduction and the majority supports the balanced budget amendment to the constitution that needs only a few more states to pass.

So the recent data shows export growth fading, credit expansion fading, housing soft and housing prices in decline, car sales past their peak, retail sales fading, and even industrial production fading.

Not to mention the Saudi price cutting that could easily wipe out the energy related investment component of GDP.

Employment Situation
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Highlights
The October employment situation was mixed. Payroll jobs advanced but below expectations. The unemployment rate ticked down again. But wages remained soft. The data will let the Fed remain loose.

Nonfarm payroll jobs advanced 214,000 in October after gaining 256,000 September and 203,000 in August. Net revisions for August and September were up 31,000. The median market forecast for October was for a 240,000 boost.

The unemployment rate dipped to 5.8 percent in October from 5.9 percent in September. Expectations were for 5.9 percent.

Going back to the payroll report, private payrolls grew 209,000 after advancing 244,000 in September. Analysts projected 235,000.

Average hourly earnings edged up 0.1 percent after no change in September. Market forecasts were for 0.2 percent. Average weekly hours ticked up to 34.6 hours versus 34.5 hours in September. Projections were for 34.6 hours.

Essentially, the labor market is improving but slowly and remains soft. Based on today’s data and unless the numbers strengthen faster the Fed likely will not rush increases in policy rates.
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mtg purchase index, ADP

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Finally up a bit for the week!
But now down some 13% vs last year.

Construction, exports, factory orders, all in retreat, and energy investment now on the edge of collapse as oil prices fall.

Q3 already revised down some, with more likely. And odds continue to increase for a negative Q4.

All of which now seems likely to draw spending cuts/proactive deficit reduction from the new Congress?

:(

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This is a decent jobs number, but a while back this ADP release switched from being a report of their payroll numbers to a forecast the BLS employment report, released on Friday. What they do is take their internal payroll numbers for the actual accounts they service and then use that information along with various surveys and other related data, including seasonal adjustments, to forecast Friday’s release. This is pretty much what the other professional forecasters do, which makes this report ‘just another forecast’ and not a ‘hard number’ report:

Definition
The ADP national employment report is computed from a subset of ADP records that represent approximately 400,000 U.S. business clients and approximately 23 million U.S. employees working in all private industrial sectors. ADP contracted with Moody’s Analytics to compute a monthly report that would ultimately help to predict monthly nonfarm payrolls from the Bureau of Labor Statistic’s employment situation. The ADP report only covers private (excluding government) payrolls.

ADP Employment Report

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Personal Income and Outlays, Employment Cost Index, Chicago PMI

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The stock market is happy on the false assumption that bad news means lower rates from the Fed which is good for profits, but that’s another story…

Income and spending weak, and prices soft as the Fed continues to fail on at least that part of its mandate:

Personal Income and Outlays
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Highlights
Personal income continues a modest uptrend but spending slipped on volatile auto sales and lower gasoline prices. Personal income advanced 0.2 percent in September, following a 0.3 percent gain in August. Analysts projected a 0.3 percent gain for September. The wages & salaries component increased 0.2 percent, following a 0.5 percent boost the prior month. Averaging the wage gains leaves consumer basic income moderately healthy.

Analysts botched their forecast for spending for September-and for no apparent reason. Personal spending declined 0.2 percent after jumping 0.5 percent in August. The latest figure came in below market expectations for a 0.1 percent rise. Weakness was in the durables component which fell 2.0 percent after a 2.1 percent jump in August, reflecting swings in auto sales. Lower gasoline prices pulled down on nondurables. Nondurables spending declined 0.3 percent after falling 0.4 percent in August. Services firmed 0.2 percent, following a 0.5 percent spike in August.

PCE inflation remains soft. The September figure matched expectations for a 0.1 percent increase and followed a dip of 0.1 percent in August. Core PCE inflation rose 0.1 percent in September, following a gain of 0.1 percent in August and equaling expectations.

On a year-ago basis, headline PCE inflation held steady at 1.4 percent in September. Year-ago core inflation was 1.5 percent in both September and August. The Fed doves will not be in a rush to boost policy rates early next year.

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Note how after tax cpi adjusted income- purchasing power- keeps ratcheting down:
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And wonder why you don’t hear much about this?
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Employment Cost Index
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Working its way higher, but still very low, particularly in light of productivity increases. And with profit margins at a new record high of 13%, almost double the norm, there’s
plenty of room for wages to increase before pressuring prices.
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Manufacturing chugging along:ism

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Talking points for 11am WRKO radio interview

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Jobs: Just keeping up with population growth- 59% three months in a row, not at all ‘recovering’ as in prior cycles. So seems the extra jobs are from underestimating population growth?

Spending- working its way lower after the tax hikes and sequesters. Q3 201313 was supported by unsold inventories, Q4 13 by expiring tax credits, then down for Q1 2014 as inventories were reduced and cold weather hurt some, and a Q2 bounce that resulted in only 1.2% growth for the first half of this year:

You can see how in the previous cycle the large drop in the growth rate was followed by a rebound to much higher rates of growth. The current cycle saw a much larger decline in GDP that was followed by lower rates of growth that now seem to be further declining:

You can see the persistent shift down after the last recession that didn’t happen in prior cycles:

Inflation? 6 years of 0 rates, over 4 trillion of QE, and the Fed still can’t hit it’s 2% target? Maybe it’s not so easy to inflate as most think? And just maybe the Fed has it all backward, and 0 rates and QE are deflationary?

Like the hairdresser said, “no matter how much I cut off its still too short”:

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