Blue World Employment Situation Report Analysis 9-6-2013

Blue World Employment Situation Report Analysis

Release Date:  Usually the first Friday of each month

Release Site:

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH 

Friday, September 06, 2013 

Brain surgery is not rocket science to a brain surgeon©

Whoa, Nellie!!

Last month we all but hit copy and paste from May because July was just the same ‘ol, same ‘ol after we missed June.  This month there is news.  Big news…and it does not bode well for the American labor market, and therefore, the U.S. economy.  As much as we hate to sound so negative, we ask you to remember that we have to call it like we see it.  Spin is available through a million other sources so feel free, but here we want to provide actionable intelligence to our readers, so here goes… 

The mundane and predictable, first:

The Bureau of Labor statistics reports 169,000 new jobs created in August of 2013.  Of those only 152,000 came from the private sector.   The civilian labor force continued to shrink, the total number of employed people fell and those not in the labor force grew by over a half million!  More noticeable, the participation rate fell by an attention commanding .2% to 63.2%. 

Employment in construction could do no better than break even, and the gain in manufacturing was not enough to offset the July decline. 

Average weekly work hours for all employees remained stagnant, with construction and manufacturing following suit. 

Hourly and weekly wages grew month over month by .2% and .5%, respectively.  Each are up 2.2% and 2.5% year over year which, at present, is just about parity with inflation.  That means any increase in inflation will have a negative impact in buying power. 

We occasionally report on the diffusion index for the manufacturing industries.  There are a total of 81, and the diffusion index indicates the percentage of those industries that are either holding steady or adding jobs.  A 50 is a breakeven, so over 50 shows expansion and under shows contraction.  This index, in spite of a 3 month uptrend, is still below 50. 

To the more extraordinary…

The overall unemployment rate (7.3%) is reported based on the labor force including all those 16 years of age and older. Then the population is broken down into smaller segments which include:

  • Adult Men 20+
  • Adult Women 20+
  • Teens 16 – 19
  • Whites
  • Blacks
  • Asians
  • Hispanics 

A month over month move in any group is usually .1%, maybe .2%.  August 2013 saw a .4% rise in the unemployment rate among blacks.  That’s a big number. 

The REALLY Big News:

Revisions to the numbers go back three months, and then there are annual adjustments.  We expect these and track them, but we don’t often see the numbers change like this.  Are you sitting down? 

The BLS revised the June report from 188,000 to 172,000.  That is a significant reduction but not eye popping.  The July report, however, was adjusted from 162,000 to 104,000!  That is 74,000 fewer jobs created than initially reported in the summer of 2013.  So, how do those revisions affect our confidence in today’s report? 

We advocate continued caution with regard to investment and expansion.  Cash is king, and defense essential to avoid getting caught off guard by sudden shifts.  There are lots of things out there right now that can cause sudden shifts. 

Have a great month.  See you next time! 

Thanks for reading and, please, stay tuned…

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Friday, September 06, 2013