Blue World Jobs Report Analysis 07/07/2017

Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Date Friday, July 7, 2017 

Brain Surgery is not Rocket Science to a Brain Surgeon©

Better, not stellar! June 2017 was a much better month for jobs than May, but that’s a pretty low bar. As Matt said on CBS Chicago last Monday, you could have knocked us over with a feather at the rate raise. Last month’s jobs report fed the doves, and we saw no chance of a hike. We were dying to see the minutes so we’d get a hint of what they saw that we didn’t. The answer is “nothing.” This raise was all on spec and what they “think” will happen with inflation considering the “strengthening” in the job market so, clearly, the consumer will start spending soon and inflation will, ya know, show up. Evidence schmevidence!

So, what about today? At the headline we saw 222k net new hires less the 35k added to government payrolls, the private sector logged 187k net new jobs. Better? Sure, but it’s kinda like a pro golfer shooting par on a par 5 under 500 yards. In other words, no damage done and yet disappointing. There were solid improvements in the key indicators we follow like the Civilian Labor Force size, Total Employed, and the Participation Rate. There was also a decrease in the Not in Labor Force number, which has remained below 95M for the year.

BUT…

The Participation Rate remains below 63% (It was 64%+ back in 2011, and we were horrified then!) While the Not in Labor Force numbers do appear to have leveled off, the chart has not started a down trend yet, and that is what makes characterizations of “full employment” ludicrous. When looking at the U-6 line of Table A-15 of the report that takes those and several other labor underutilization stats into account, the true unemployment rate is still 9%.

Weekly hours and wages also showed some life, and the workweek has now touched 34.5 hours twice in three months. It’s been a while since we’ve seen that. Hourly and Weekly wages posted 2.5% and 2.8% year-on-year gains, respectively.

Better? Yes. Stellar? No. Good enough for a rate hike? NO! The hard data to support it just isn’t there. Have a look at the Blue World Economic Index® for more detail June’s economic reporting.

We hope 4th of July was fun and safe. See you back here in August.

As always, thanks for reading, and please stay tuned…

Release Site: www.bls.gov

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, July 07, 2017

Blue World Economic Index® for June 2017

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

Release Site: www.blueworldassetmanagers.com

Brief Explanation

Date: Friday, July 7, 2017

Brain Surgery is not Rocket Science to a Brain Surgeon©

Rate hike? REALLY?

Wow, we’ve seen some speculative moves in our day, but this one is worthy of commodity speculators!! We thought either we missed something or they are betting the come. Of course, we know it’s not the former! The notes essentially confirm their decision is based on what they think will happen as opposed to what is happening. Most notably, they think with the Labor Market “strengthening” consumers will start spending soon and that coupled with wage acceleration will drive inflation. Those are some high odds bets considering nine years of flat “expansion.” Gotta love dem “experts! ”

Let’s look at what’s really happening. The BWEI® Composite pulled back from -07 to an even -.1. Deterioration was led by Employment (-.21) and Inflation (-.14) GOTTA LOVE DEM EXPERTS!! (Apologies for the outburst…) There were fractional declines in Consumer Measures and Real Estate with Manufacturing holding unchanged at the Category Composite and Fed sub-group. Minor gains were seen in General Measures and Retail, although the retail improvement was led by the Red Book weekly report which is notoriously contrarian with other retail metrics. The most substantial move to the upside was Services at a .11 pickup.

Rate hike? We think it a seriously big bet, especially as the talk of recession and market meltdowns is being broadcast from Marshall stacks.

We’ll see!

Matt will be on WBBM in Chicago to talk about the June jobs report at 12:09C. The report is up here.

Have a great month and we’ll meet back here in August 2017.

 

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

 

©Blue World Asset Managers, LTD Friday, 7/7/2017