Blue World Jobs Report Analysis 4-4-2014

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, April 04, 2014

Brain surgery is not rocket science to a brain surgeon©

How often did you find yourself in math class laughing out loud because arithmetic was so funny?  It is so rare for remedial math to be entertaining that we feel obligated to revisit the who’s-on-first dynamic of the employment numbers relative to the unemployment rate.  In January we added 145k, and the unemployment rate got better.  In February we got 162k, and the rate got worse.  Now we get 192k and rate is – wait for it – UNCHANGED!

By now most of us have heard the 192k with an unchanged rate of 6.7% headlines, so let’s do what we do and take a look at what it really means.

As usual, there were no seismic changes during March 2014, so we would expect that things are about the same, and they are…with a couple of insidious trends emerging that are way off the radar of the media folk  and “experts.”  We’ll get to those in a bit.

The “expert” consensus called for about 206k new hires with estimates covering a wide range from 175k on the low side to 275k on the high end.  Emphasis on the last in recognition of the likelihood that particular “expert” is from Colorado, voted in favor of the referendum to legalize pot and was partaking when rendering his estimate!  The 192k number is the net for total private hires as government neither added nor lost jobs for the month.  There was a significant upward revision to the February number from 175k to 197k, but that is still way short of what we’d consider acceptable in “normal” times much less 5 years into a “recovery.” (BTW, even with that revision the rate is ‘unchanged’)

The participation rate remains in record low territory, and in spite of an increase of .2 to 63.2, it languishes below the level of a year ago.  This is, of course, continued evidence of the bleeding of available work force.  Those workers 25 years and older with a Bachelor’s degree or better remain frustratingly unemployed at historically high rates.

The work week ticked up a bit but remains range bound and is no better than it was in March of 2013.  Average hourly wages moved backwards while weekly earners fared a little better, and overtime hours in manufacturing remains tightly range bound.

Now for the more insidious stuff…

Those employed part-time for economic reasons appear to be stair-stepping upward.  There were notable increases in the number of those unemployed between zero and 26 weeks, and the number of unemployed people rose in spite of the jobs total, participation rate and marginally attached number.  However, the big one comes from the oft-overlooked diffusion index in manufacturing.  To review, the diffusion index looks at the manufacturing sector as a whole, which is composed of 81 industries.  A diffusion index of 50 indicates as many industries added or remained neutral in terms of new hires as shed jobs.  For the first quarter of 2014 the index has declined January to March at the attention getting rate of 55.6, 51.9, 50.0.  Those numbers are rather startling but it gets worse when we look back and see that in March of 2013 the rate was 52.5.

If you run a business, manage people, invest real money or seek to make a meaningful contribution to the economy the posture must remain defensive because in spite of the irrational public markets behavior, false or foolish optimism, headlines and spin, we have no choice but to conclude that the “recovery”…well…isn’t.

Thanks for reading and, please, stay tuned…

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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, April 04, 2014