Blue World Jobs Report Analysis 11/04/2016

Release Date: Usually on the first Friday of the month

Release Site:

Market Impact: Usually Very High

Management Value: Critical

Friday, November 4, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

Weak at the headline and worse in the detail…but some media “experts” are trumpeting the great strength???

After a quicker than usual review of the key factors that we usually cite, we will key on what is the Biggest Unreported (except here) Policy-Driven Cataclysm of the 2016 Employment Situation picture. So here we go…

The headline tells us 161k net new payrolls were added for the month of October, 2016. That number unto itself is unacceptable, but the important number of private sector new hires came in at 142k. The Not in Labor Force number jumped back up by over 400k, and the Participation Rate remains stubbornly and pathetically below 63% of able-bodied Americans participating in the labor force. There was a very large jump in those that work part-time because they could only find part-time work, and the Diffusion Index in manufacturing is again below 50 indicating that of the 79 manufacturing industries, over half are stagnant or reducing their labor force.

So, what’s the Big Cataclysm we’re referring to? Net Jobs Added to the Private Sector. The 2014-2015 average new hires for the Private Sector was 238k per month. That’s not stellar but at least flirts with the estimated requirements to break even on additions to the workforce. In 2016 the average through October has fallen to 163k per month. To get back into the 2014-5 range, the economy would have to add over 500k private sector jobs in November and December. Do we need to tell you that isn’t going to happen?

We are regularly asked, “If it’s as bad as you say then why?”

  • Do we hear things are so great in the media?
  • Why are earnings good?
  • Why is the stock market doing so well?

Three simple answers to three very good questions:

  • The media is agenda driven and has a vested interest in people believing things are good.
  • Earnings are good for mega-companies that trade publicly—It’s not the big companies that are suffering. It is the small and mid-size firms that provide the majority of jobs getting killed by anti-employer policies like tax, benefits, and arbitrarily and unconscionably high minimum wage mandates.
  • The markets have ceased being concerned with economic fundamentals and react to anticipated or announced government action, ours and foreign, particularly China.

Here are three better questions:

  • Why is inflation so low after eight years of “recovery?”
  • Why are there still over 94 Million Americans Not in the Labor Force with an uninterrupted upward trend since 2011?
  • Why won’t the Fed raise rates in spite of so many pressures to do so?

Simple answers (because Brain Surgery is not Rocket Science to a Brain Surgeon©)

  • Because the diminished work force won’t allow for demand to increase.
  • Because small and mid-sized firms are being regulated out of growth potential.
  • Because the economic data simply don’t support it. (See the previous two bullets)

Yes, we know there are skeptics and cynics out there who are already disagreeing with us and pointing to some positive hints deep in the weeds of this release. But remember, we view this through the eyes of business owners and managers, not financial industry marketers or politicians. Our goal is to help real businesses make real decisions based on data analyzed from their point of view. To that end let’s look at a couple of remedial facts:

  • 2014-2015 Average Private Sector Hires = 238 Thousand per month
  • Mid 2015 – Present: State, County, Municipal mandates for double digit minimum wage
  • December 16, 2015: .25 Fed Rate Hike
  • 2016 Average Private Sector Hires = 163 Thousand per month

That is a staggering reduction of 43%.  Coincidence? We Think Not!

Policy matters, and these aren’t working.

Happy belated Halloween. Congratulations Chicago. Have a safe, wonderful Thanksgiving and we’ll see you at month’s end for the Blue World Economic Index® report.

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, November 04, 2016